UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the fiscal year
For the fiscal year ended March 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the
transition period from ______ to ____________
(Commission File Number) 0-17619
American Tax Credit Properties L.P.
(Exact name of registrant as specified in its governing instruments)
Delaware 13-3548875
(State or other jurisdiction of organization) (I.R.S. Employer
Identification No.)
Richman Tax Credit Properties L.P.
599 West Putnam Avenue, 3rd floor
Greenwich, Connecticut 06830
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 869-0900
Securities registered pursuant to Section 12(b) of the Act:
None None
(Title of each Class) (Name of each exchange on
on which registered)
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
- - --------------------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
Registrant has no voting stock.
Documents incorporated by reference:
Part I - pages 21 through 35 and 51 through 75 of the prospectus dated May 6,
1988, as supplemented by Supplement No. 1 and Supplement No. 2 dated August 11,
1988 and September 20, 1988, respectively, filed pursuant to Rule 424(b)(3)
under the Securities Act of 1933.
<PAGE>
- - --------------------------------------------------------------------------------
PART I.
- - --------------------------------------------------------------------------------
Item 1. Business.
Formation.
American Tax Credit Properties L.P. ("Registrant"), a Delaware limited
partnership, was formed on February 12, 1988 to invest primarily in leveraged
low-income multifamily residential complexes (the "Property" or "Properties")
which qualify for the low-income tax credit established by Section 42 of the Tax
Reform Act of 1986 (the "Low-income Tax Credit"), through the acquisition of
limited partnership equity interests in partnerships (the "Local Partnership" or
"Local Partnerships") that are the owners of the Properties. Registrant has
invested in nineteen such Properties including one Property which also qualifies
for the historic rehabilitation tax credit in accordance with Section 48(g) of
the Internal Revenue Code of 1986 (the "Historic Rehabilitation Tax Credit").
Registrant considers its activity to constitute a single industry segment.
Richman Tax Credit Properties L.P. (the "General Partner"), a Delaware limited
partnership, was formed on February 10, 1988 to act as the sole general partner
of Registrant. The general partners of the General Partner are Richard Paul
Richman and Richman Tax Credit Properties Inc. ("Richman Tax"), a Delaware
corporation which is wholly-owned by Richard Paul Richman. Richman Tax is an
affiliate of both The Richman Group, Inc. ("Richman Group"), a Delaware
corporation founded by Richard Paul Richman in 1988 and Wilder Richman
Corporation ("WRC"), a New York corporation co-founded by Richard Paul Richman
in 1979.
The Amendment No. 2 to the Registration Statement on Form S-11 was filed with
the Securities and Exchange Commission (the "Commission") on April 29, 1988
pursuant to the Securities Act of 1933 under Registration Statement No.
33-20391, which was declared effective on May 4, 1988. Reference is made to the
prospectus dated May 6, 1988, as supplemented by Supplement No. 1 and Supplement
No. 2 dated August 11, 1988 and September 20, 1988, respectively, filed with the
Commission pursuant to Rule 424(b)(3) under the Securities Act of 1933 (the
"Prospectus"). Post-Effective Amendment No. 1 to the Registration Statement on
Form S-11 was filed with the Commission on November 21, 1988. Pursuant to Rule
12b-23 of the Commission's General Rules and Regulations promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
description of Registrant's business set forth under the heading "Investment
Objectives and Policies" at pages 51 through 75 of the Prospectus is
incorporated herein by reference.
On May 11, 1988, Registrant commenced, through Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), the offering of up to 50,000 units of
limited partnership interest ("Unit") at $1,000 per Unit. On August 19, 1988,
the first closing for 23,603 Units took place and on November 15, 1988, the
second and final closing for 17,683 Units took place. Limited partners' capital
contributions amounted to $23,603,000 and $17,683,000 for the first and second
closings, respectively, for a total of $41,286,000.
Competition.
Pursuant to Rule 12b-23 of the Commission's General Rules and Regulations
promulgated under the Exchange Act, the description of Registrant's competition,
general risks, tax risks and partnership risks set forth under the heading "Risk
Factors" at pages 21 through 35 of the Prospectus is incorporated herein by
reference.
Employees.
Registrant employs no personnel and incurs no payroll costs. All management
activities of Registrant are conducted by the General Partner. An affiliate of
the General Partner employs individuals who perform the management activities of
Registrant. This entity also performs similar services for other affiliates of
the General Partner.
Item 2. Properties.
The executive offices of Registrant and the General Partner are located at 599
West Putnam Avenue, 3rd floor, Greenwich, Connecticut 06830. Registrant does not
own or lease any properties. Registrant pays no rent; all charges for leased
space are borne by an affiliate of the General Partner.
Registrant's primary objective is to provide Low-income Tax Credits to limited
partners generally over a ten year period. Each of Registrant's Local
Partnerships has been allocated by the relevant state tax credit agency an
amount of Low-income Tax Credits for ten years from the date the Property is
placed in service. The required holding period of each Property, in order to
avoid Low-income Tax Credit recapture, is fifteen years from the year in which
the Low-income Tax Credits commence on the last building of the Property (the
"Compliance Period"). In addition, certain of the Local Partnerships have
entered into agreements with relevant state tax credit agencies whereby the
Local Partnerships must maintain the low-income nature of the Properties for a
period which exceeds the Compliance Period, regardless of any sale of the
Properties by the Local Partnerships after the Compliance Period. The Properties
must satisfy various requirements including rent restrictions and tenant income
limitations (the "Low-income Tax Credit Requirements") in order to maintain
eligibility for recognition of the Low-income Tax Credit at all times during the
Compliance Period. Once a Local Partnership has become eligible for the
Low-income Tax Credit, it may lose such eligibility and suffer an event of
recapture if its Property fails to remain in compliance with the Low-income Tax
Credit Requirements. Through December 31, 1995, none of the Local Partnerships
have suffered an event of recapture of Low-income Tax Credits. However, in
connection with the eminent domain proceeding of B & V, Ltd. (see Part II, Item
7-Management's Discussion and Analysis of Financial Condition and Results of
Operations herein) effective April, 1996, the City of Homestead was awarded four
buildings comprising 32 rental units in a quick-take proceeding. As a result of
the quick-take proceeding, Registrant will incur a recapture of Low-income Tax
Credits taken through December, 1995 of approximately $163,000 and will be
unable to utilize future Low-income Tax Credits associated with such rental
units of approximately $188,000 for the period January, 1996 through 1998. In
addition, the management agent was notified on June 14, 1996 by the monitoring
agent for the Florida Housing Finance Agency that, as a result of rental units
not in service, a portion of the property is considered to be in non-compliance
which could result in additional recapture or the inability to utilize future
Low-income Tax Credits.
Although Registrant generally owns a 98.9%-99% limited partnership equity
interest ("Local Partnership Interest") in the Local Partnerships, Registrant
and American Tax Credit Properties II L.P. ("ATCP II"), a Delaware limited
partnership and an affiliate of Registrant, together, in the aggregate, acquired
a 99% Local Partnership Interest in the Santa Juanita Limited Dividend
Partnership, L.P. (the "Santa Juanita Local Partnership"); the ownership
percentages of Registrant and ATCP II for the Santa Juanita Local Partnership
are 34.64% and 64.36%, respectively.
Virtually all of the Local Partnerships receive rental subsidy payments,
including payments under Section 8 of Title II of the Housing and Community
Development Act of 1974 ("Section 8") (see descriptions of subsidies on page 5).
The subsidy agreements expire at various times during and after the Compliance
Periods of the Local Partnerships. The United States Department of Housing and
Urban Development ("HUD") has issued a notice implementing provisions to renew
Section 8 contracts expiring during HUD's fiscal year 1996, where requested by
an owner, for an additional one year term at current rent levels. At the present
time, Registrant cannot reasonably predict legislative initiatives and
governmental budget negotiations, the outcome of which could result in a
reduction in funds available for the various federal and state administered
housing programs including the Section 8 program. Such changes could adversely
affect the future net operating income and debt structure of any or all Local
Partnerships currently receiving such subsidy or similar subsidies.
<TABLE>
<CAPTION>
Mortgage loans
Name of Local Partnership Number payable as of Subsidy
Name of apartment complex of rental Capital December 31, (see
Apartment complex location units contribution 1995 footnotes)
- - -------------------------------- ----------- ------------ -------------------- ----------
<S> <C> <C> <C> <C>
4611 South Drexel Limited Partnership
South Drexel Apartments
Chicago, Illinois 44 $ 352,433 $ 1,378,616 (1d)
B & V, Ltd. (3)
Homestead Apartments
Homestead, Florida 190 2,050,795 5,545,119 (1a)
B & V Phase I, Ltd.
Gardens of Homestead
Homestead, Florida 97 140,000 2,638,947 (1a)
Blue Hill Housing Limited Partnership
Blue Hill Housing
Grove Hall, Massachusetts 144 4,506,082 6,575,760 (1a)
Cityside Apartments, L.P.
Cityside Apartments
Trenton, New Jersey 126 6,098,990 7,922,111 (1a)
Cobbet Hill Associates Limited Partnership (4)
Cobbet Hill Apartments
Lynn, Massachusetts 117 4,910,942 13,449,324 (1a&c)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Mortgage loans
Name of Local Partnership Number payable as of Subsidy
Name of apartment complex of rental Capital December 31, (see
Apartment complex location units contribution 1995 footnotes)
- - -------------------------------- ----------- ------------ -------------------- ----------
<S> <C> <C> <C> <C>
Dunbar Limited Partnership
Drexel View Apartments
Chicago, Illinois 100 $ 1,518,229 $ 4,016,519 (1a)
Dunbar Limited Partnership No. 2
Baptist Tower Apartments
Chicago, Illinois 102 1,701,849 4,598,856 (1a)
Erie Associates Limited Partnership
Erie Ventures Rental Infill
Springfield, Massachusetts 18 755,736 928,022 (1b)
Federal Apartments Limited Partnership
Federal Apartments
Fort Lauderdale, Florida 164 2,832,224 5,393,144 (1a)
Golden Gates Associates
Golden Gates
Brooklyn, New York 85 879,478 4,669,861 (1c)
Grove Park Housing, A California Limited Partnership Grove
Park Apartments
Garden Grove, California 104 1,634,396 6,952,566 (1a)
Gulf Shores Apartments Ltd.
Morgan Trace Apartments
Gulf Shores, Alabama 50 352,693 1,495,054 (1c)
Hilltop North Associates, A Virginia Limited Partnership
Hilltop North Apartments
Richmond, Virginia 160 1,414,524 3,358,811 (1a)
Madison-Bellefield Associates
Bellefield Dwellings
Pittsburgh, Pennsylvania 158 1,047,744 3,720,055 (1a)
Pine Hill Estates Limited Partnership
Pine Hill Estates
Shreveport, Louisiana 110 613,499 2,516,299 (1a)
Santa Juanita Limited Dividend Partnership L.P.
Santa Juanita Apartments
Bayamon, Puerto Rico 45 313,887 (2) 1,532,327 (1a)
Vista del Mar Limited Dividend Partnership L.P.
Vista del Mar Apartments
Fajardo, Puerto Rico 152 3,097,059 5,407,880 (1a)
Winnsboro Homes Limited Partnership
Winnsboro Homes
Winnsboro, Louisiana 50 289,730 1,255,005 (1a)
----------- -----------
$34,510,290 $83,354,276
========== ==========
- - ------------------------------------------------------------ ----------- ---------------------- ------------------- -------------
Footnote descriptions are located on the following page.
</TABLE>
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(1) Description of Subsidies:
(a) Section 8 of Title II of the Housing and Community
Development Act of 1974 allows qualified low-income tenants
to pay thirty percent of their monthly income as rent with
the balance paid by the federal government.
(b) Chapter 707 of the Acts of 1966 of the State of
Massachusetts allows qualified low-income tenants to pay a
portion of their rent with the balance paid by Worcester
Housing Authority.
(c) The Local Partnership's debt structure includes a principal
or interest payment subsidy.
(d) The city of Chicago Housing Authority allows qualified
low-income tenants to receive rental certificates.
(2) The capital contribution reflects Registrant's obligation
only.
(3) In August, 1992, the property owned by B & V, Ltd. ("the B
& V Local Partnership") sustained considerable damage by
Hurricane Andrew. See Part I, Item 3-Legal Proceedings and
Part II, Item 7-Management's Discussion and Analysis of
Financial Condition and Results of Operations included
herein for further information.
(4) Cobbet Hill Associates Limited Partnership's complex also
qualifies for the historic rehabilitation tax credit in
accordance with Section 48 (g) of the Internal Revenue Code
of 1986.
Item 3. Legal Proceedings.
As discussed in Part II, Item 8 - Financial Statements and Supplementary Data
and Part II, Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations included herein, the B & V Local Partnership
sustained considerable damage in August, 1992 due to Hurricane Andrew. Although
the B & V Local Partnership was insured for property damage and rental
interruption, the insurance company has not fully performed under its coverage
obligation. Because of this circumstance and due to its limited resources, the B
& V Local Partnership filed a voluntary petition of bankruptcy under Chapter 11
of the Bankruptcy Code on November 21, 1994 in order to have a court address
matters concerning the insurance company, the contractor and the contractor's
bonding company. The petition was filed in the United States Bankruptcy Court,
Southern District of Florida, Miami. The B & V Local Partnership was authorized
to continue in the management and control of its business and property as
debtor-in-possession under the Bankruptcy Code. Because the construction
contract provides for disputes to be remedied through binding arbitration, the
bankruptcy court decided to have the action against the contractor and its
bonding company settled in binding arbitration rather than through a bankruptcy
proceeding. Accordingly, the B & V Local Partnership has commenced an action
directly against the contractor and the contractor's bonding company.
In connection with the foregoing, the B & V Local Partnership is a defendant in
a lawsuit brought by the contractor alleging non-payment for repairs of
approximately $120,000. The local general partner of the B & V Local Partnership
denies that any amounts are due and has counterclaimed that the contractor
breached its contract by rendering inadequate services and causing the B & V
Local Partnership to incur substantial expense to remedy the defects. In
connection with the reconstruction of the complex, the B & V Local Partnership
has countersued the contractor and the contractor's bonding company for damages
to the B & V Local Partnership's property. In addition, the B & V Local
Partnership has brought an action against its insurance carrier for delays in
settling its property damage claim. Lastly, the City of Homestead filed an
action in order to take four buildings comprising 32 rental units by eminent
domain proceeding. Effective April, 1996, the City of Homestead was awarded such
buildings pursuant to a quick-take proceeding and in June, 1996, the B & V Local
Partnership accepted a settlement offer from the City of Homestead in the amount
of $280,000 plus legal costs. It is not possible at this time to determine the
final economic impact resulting from Hurricane Andrew and the above stated legal
proceedings on the B & V Local Partnership and Registrant.
On March 5, 1990, Stonebridge Associates ("Stonebridge") filed a lawsuit against
Federal Apartments Limited Partnership (the "Federal Local Partnership") for
repayment of an unsecured, non-interest bearing note in the amount of $96,000.
The suit was filed in the First Judicial District Court in Caddo Parish,
Louisiana. The suit alleges that the defendant was required to pay down such
note upon the receipt of the second installment of the capital contribution
obligation from Registrant. Such capital contribution payment was made by
Registrant to the Federal Local Partnership on December 27, 1989. The Federal
Local Partnership contends that Stonebridge is not entitled to such payment.
On December 16, 1993, the Federal Local Partnership filed a lawsuit against
Henry Cisneros, in his capacity as Secretary of HUD and the Housing Authority of
the City of Fort Lauderdale, Florida ("FLHA") for violating the Administrative
Procedures Act. The suit was filed in the United States District Court, Southern
District of Florida (the "Court"). The suit alleges that the defendants used an
incorrect figure for debt service in determining the base rent component of the
Federal Local Partnership's Section 8 rents, resulting in rents at a level
insufficient to service the Federal Local Partnership's co-insured first
mortgage and, as a further result, the amount of the maximum insurable first
mortgage was reduced and the local general partner of the Federal Local
Partnership had to provide approximately $1,299,000 to the Federal Local
Partnership. The Federal Local Partnership seeks payment of the difference in
rents dating from 1988 to the present and recovery of all legal fees. The local
general partner of the Federal Local Partnership estimates that the annual
difference in rents resulting from the defendants' methods is approximately
$180,000. Although the Court has ruled that HUD acted within its authority in
denying certain change orders incurred in connection with the development of the
property owned by the Federal Local Partnership, the Court also remanded HUD to
review the rent computations used in determining the base rent component. The
local general partner of the Federal Local Partnership expects to appeal the
Court's ruling regarding the change orders, the impact of which is approximately
$60,000 per year according to the local general partner. The Federal Local
Partnership is unable to determine at this time the final amounts that may be
recoverable from HUD and/or FLHA.
The principal shareholder of the local general partner of Grove Park Housing, A
California Limited Partnership (the "Grove Park Local Partnership") recently
pled guilty to criminal charges of mail fraud, submitting a false statement to
HUD and obstructing a HUD audit in connection with alleged misappropriation of
funds. Registrant is not aware of any charges of alleged misappropriation
related to the local general partner's management of the Grove Park Local
Partnership.
Registrant is not aware of any other material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of the limited partners of Registrant
during the fourth quarter of the fiscal year covered by this report.
<PAGE>
PART II.
Item 5. Market for Registrant's Common Equity
and Related Security Holder Matters.
Market Information and Holders.
There is no established public trading market for the Units. There are
provisions in the Amended and Restated Agreement of Limited Partnership of
Registrant which are intended to prevent the development of a public secondary
market. Since November 9, 1992, Merrill Lynch has provided its clients with a
limited partnership secondary service available through Merrill Lynch's Limited
Partnership Secondary Transaction Department. The number of owners of Units as
of May 7, 1996 was 2,645, holding 41,286 Units.
Since December, 1994 Merrill Lynch has provided estimated values of limited
partnerships and other direct investments on its client account statements.
Estimated values for limited partnership interests originally sold by Merrill
Lynch (such as Registrant's Units) are provided annually to Merrill Lynch by
independent valuation services. These estimated values are based on financial
and other information available to the independent services on the prior August
15th. Merrill Lynch clients may contact their Merrill Lynch financial
consultants or telephone the number provided to them on their account statements
to obtain a general description of the methodology used by the independent
valuation services to determine their estimates of value. In addition,
Registrant may provide an estimate of limited partnership value to Unit holders
from time to time in Registrant's reports to limited partners. The estimated
values provided by the independent services and Registrant, which may differ,
are not market values and Unit holders may not be able to sell their Units or
realize either amount upon a sale. In addition, Unit holders may not realize
such estimated values upon the liquidation of Registrant over its remaining
life.
Distributions.
Registrant owns a limited partnership equity interest in Local Partnerships that
are the owners of Properties which are leveraged and receive government
assistance in various forms of rental and debt service subsidies. The
distribution of any cash flow generated by the Local Partnerships may be
restricted, as determined by each Local Partnership's financing and subsidy
agreements. Accordingly, Registrant does not anticipate that it will provide
significant annual cash distributions to its partners. There were no cash
distributions to the partners during the years ended March 30, 1996 and 1995.
Low-income Tax Credits and Historic Rehabilitation Tax Credits (together, the
"Tax Credits") which are subject to various limitations, may be used by
investors to offset federal income tax liabilities. The Tax Credits per Unit
generated by Registrant and allocated to the limited partners for the tax years
ended December 31, 1995 and 1994 and the cumulative Tax Credits allocated from
inception through December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Historic
Rehabilitation Low-income
Tax Credits Tax Credits
<S> <C> <C>
Tax Year Ended December 31, 1995 $ -- $ 146.01
Tax Year Ended December 31, 1994 -- 144.62
Cumulative totals $ 71.88 $ 1,060.01
</TABLE>
Notwithstanding circumstances which may give rise to recapture or loss of future
benefits (see Part I, Item 2 - Properties and Part II, Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations,
herein), Registrant expects to generate total Tax Credits over the term of
Registrant totaling approximately $1,600 per Unit.
<PAGE>
Item 6. Selected Financial Data.
The information set forth below presents selected financial data of Registrant.
Additional detailed financial information is set forth in the audited financial
statements included under Part II, Item 8 herein.
<TABLE>
<CAPTION>
Years Ended March 30,
1996 1995 1994 1993 1992
---------------- --------------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Interest Revenue $ 269,591 $ 286,748 $ 291,695 $ 268,884 $ 367,945
============= ============= ============ ============= =============
Equity in Loss of Investment
in Local Partnerships $(2,240,958) $(2,319,646) $(3,817,612) $(4,077,150) $(4,477,245)
=========== =========== =========== =========== ===========
Net Loss $(2,425,508) $(2,498,880) $(4,002,184) $(4,257,366) $(4,558,740)
=========== =========== =========== =========== ===========
Net Loss per
Unit of Limited Partnership
Interest (41,286 Units of
Limited Partnership Interest) $ (58.16) $ (59.92) $ (95.97) $ (102.09) $ (109.31)
============== ============== ============== ============= =============
As of March 30,
1996 1995 1994 1993 1992
---------------- ---------------- ---------------- ---------------- ----------
Total Assets $13,040,183 $15,370,194 $17,766,222 $21,768,328 $26,098,590
=========== =========== =========== =========== ===========
</TABLE>
- - --------------------------------------------------------------------------------
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Capital Resources and Liquidity.
Registrant registered 50,000 units of limited partnership interest ("Units") at
$1,000 per Unit with the Securities and Exchange Commission (the "Commission")
and on May 4, 1988, the Commission declared effective Amendment No. 2 to the
Registration Statement on Form S-11. Registrant admitted limited partners on
August 19, 1988 and November 15, 1988 in two closings with aggregate limited
partners' capital contributions amounting to $41,286,000.
Registrant acquired nineteen limited partnership equity interests (the "Local
Partnership Interests") in partnerships (the "Local Partnership" or "Local
Partnerships") by utilizing proceeds in the amount of $34,510,290 available from
the offering of Units, net of syndication costs and amounts set aside for
working capital. The Local Partnerships own low-income multifamily residential
complexes (the "Property" or "Properties") which qualify for the low-income tax
credit established by Section 42 of the Tax Reform Act of 1986 (the "Low-income
Tax Credit"); one Local Partnership owns a Property which also qualifies for the
historic rehabilitation tax credit in accordance with Section 48(g) of the
Internal Revenue Code of 1986. The required holding period of each Property, in
order to avoid Low-income Tax Credit recapture, is fifteen years from the year
in which the Low-income Tax Credits commence on the last building of the
Property (the "Compliance Period"). The investments in Local Partnerships are
highly illiquid.
From the closing of Units, Registrant established a working capital reserve.
Registrant is not expected to have access to any source of financing.
Accordingly, if unforeseen contingencies arise that cause a Local Partnership to
require additional capital, in addition to that contributed by Registrant, the
source of such capital needs may be obtained from (i) limited working capital
reserves from Registrant (which may include distributions received from Local
Partnerships), (ii) debt financing at the Local Partnership level (which may not
be available) or (iii) additional equity contributions of the general partner of
a Local Partnership (the "Local General Partner"). In addition, the Local
Partnerships are generally expected to maintain escrow reserves over time in
addition to the reserves maintained by Registrant. There can be no assurance
that any of these sources would be readily available to provide for possible
additional capital requirements or be sufficient to remedy any such unforeseen
contingencies.
As of March 30, 1996, Registrant has cash and cash equivalents held in cash and
money market accounts totaling $397,120, all of which is set aside for working
capital which is available for operating expenses of Registrant. In addition, as
of March 30, 1996, Registrant's working capital includes investments in U.S.
Treasury bonds of $1,508,542 with various maturity dates ranging from 1996
through 2004, investments in corporate bonds of $1,432,490 with various maturity
dates ranging from 1996 through 2023 and investments in U.S. government agency
bonds of $171,017 with a maturity date of 2007. Registrant acquired such
investments with the objective of utilizing annual interest income and principal
generated by such investments to meet its annual obligations. Future sources of
Registrant's funds are expected primarily from interest earned on investments of
working capital reserves, retired investments in bonds and limited cash
distributions from Local Partnerships. These sources of funds are available to
meet the obligations of Registrant, including providing funds for the
reconstruction of the B & V Local Partnership described further below.
During the year ended March 30, 1996, Registrant received cash from interest
earned on investments of working capital reserves, inclusive of amounts accrued
as of March 30, 1995, of approximately $270,000 and cash distributions from the
Local Partnerships of approximately $87,000, of which $5,000 was classified as
other income from Local Partnerships. Registrant paid approximately $183,000 for
administration fees, approximately $175,000 for a management fee, approximately
$66,000 for professional fees and approximately $27,000 for printing, postage
and other expenses. In addition, Registrant received $134,000 from the maturity
of investments in bonds. Because Registrant's investments in bonds serve several
potential uses, including resolving unforeseen contingencies which may arise in
connection with the Properties, Registrant has classified its investments in
bonds as available-for-sale, which requires that Registrant reflect such
investments at estimated fair value on its balance sheet, with any unrealized
gains or losses reported separately through partners' equity/(deficit), rather
than through its statement of operations. Accordingly, Registrant's balance
sheets reflect investments in bonds at estimated fair value as of March 30, 1996
and 1995. Notwithstanding any such unforeseen contingencies that may arise in
connection with the Properties, Registrant intends to hold such investments to
their maturities. During the year ended March 30, 1996, Registrant recorded a
net unrealized gain on bonds available-for-sale of approximately $89,000,
resulting in a net unrealized gain of approximately $191,000 reflected in
Registrant's partners' equity/(deficit) as of March 30, 1996. Cash and cash
equivalents and investments in bonds available-for-sale decreased, in the
aggregate, by approximately $5,000 during the year ended March 30, 1996. During
the year ended March 30, 1996, the Investment in Local Partnerships decreased as
a result of Registrant's equity in the Local Partnerships' net loss for the year
ended December 31, 1995 of $2,240,958 and by cash distributions received from
Local Partnerships and credited against the investment balance of $82,000.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico. The rents of the Properties, virtually all of which receive rental
subsidy payments, including payments under Section 8 of Title II of the Housing
and Community Development Act of 1974 ("Section 8"), are subject to specific
laws, regulations and agreements with federal and state agencies. The subsidy
agreements expire at various times during and after the Compliance Periods of
the Local Partnerships. The United States Department of Housing and Urban
Development ("HUD") has issued a notice implementing provisions to renew Section
8 contracts expiring during HUD's fiscal year 1996, where requested by an owner,
for an additional one year term at current rent levels. At the present time,
Registrant cannot reasonably predict legislative initiatives and governmental
budget negotiations, the outcome of which could result in a reduction in funds
available for the various federal and state administered housing programs
including Section 8 program. Such changes could adversely affect the future net
operating income and debt structure of any or all Local Partnerships currently
receiving such subsidy or similar subsidies. Two Local Partnerships' Section 8
contracts are scheduled to expire in 1997 after being extended for one year and
one Local Partnership's Section 8 contract is scheduled to expire during 1996.
In addition, the Local Partnerships have various financing structures which
include (i) required debt service payments ("Mandatory Debt Service") and (ii)
debt service payments which are payable only from available cash flow subject to
the terms and conditions of the notes, which may be subject to specific laws,
regulations and agreements with appropriate federal and state agencies
("Non-Mandatory Debt Service or Interest"). During the year ended December 31,
1995, revenue from operations, Local General Partner advances and reserves of
the Local Partnerships have generally been sufficient to cover the operating
expenses and Mandatory Debt Service. Certain Local Partnerships are effectively
operating at or near break even levels, although such Local Partnerships'
accounting information reflects operating deficits that do not represent cash
deficits due to their mortgage and financing structure and the required deferral
of property management fees. As discussed below, certain Local Partnerships'
operating information indicates below break even operations after taking into
account their mortgage and financing structure and required deferral of property
management fees.
The terms of the partnership agreement of Federal Apartments Limited Partnership
(the "Federal Local Partnership") require the Local General Partner of the
Federal Local Partnership to cause the management agent to defer property
management fees in order to avoid a default under the mortgage. As of December
31, 1995, the Local General Partner of the Federal Local Partnership has
provided cumulative advances of approximately $460,000 under a deficit guarantee
which has expired. The Federal Local Partnership incurred an operating deficit
for the year ended December 31, 1995 of approximately $100,000, which includes
property management fees of approximately $74,000. The resulting net operating
deficit of the Federal Local Partnership of approximately $26,000 resulted
primarily from costs incurred in connection with a modification of the Federal
Local Partnership's first mortgage, which became effective November 1, 1995.
Under the terms of the modification, the interest rate was reduced from 10.75%
to 9.625%, resulting in annualized debt service savings of approximately
$50,000. The 1995 deficit was funded from Local General Partner advances. Of
Registrant's total annual Low-income Tax Credits, approximately 9.1% is
allocated from the Federal Local Partnership. The Federal Local Partnership has
filed a lawsuit against, among others, HUD alleging that HUD used an incorrect
figure for debt service in determining the base rent component of the Federal
Local Partnership's Section 8 rents, resulting in rents at a level insufficient
to service the Federal Local Partnership's first mortgage. Among other things,
the court has remanded HUD to review the rent computations used in determining
the base rent component. The Local General Partner of the Federal Local
Partnership is unable to determine at this time the final amounts that may be
recoverable.
Registrant acquired a 99% limited partnership interest in B & V, Ltd. (the "B &
V Local Partnership"), a 190-unit complex, located in Homestead, Florida in
December, 1988. In August, 1992, much of Homestead, Florida was devastated by
Hurricane Andrew and the Property owned by the B & V Local Partnership sustained
substantial damage. The City of Homestead has taken, but has not acted upon,
administrative action threatening to demolish approximately 100 rental units in
the B & V complex unless reconstruction immediately commences. If demolished,
the rebuilding of all such rental units would be subject to changes in zoning by
the City of Homestead and the results of litigation remedies being pursued by
the B & V Local Partnership, discussed below. The damage to the complex is
covered by property insurance. The Local General Partner of the B & V Local
Partnership, on behalf of the B & V Local Partnership and at the insistence of
the insurance company, entered into a contract with a particular contractor to
repair the damage. After some delay the insurance company partially funded
insurance proceeds to rebuild the complex and repairs commenced; however, on or
about March 30, 1994, the contractor discontinued the repair work due to a
dispute concerning costs and the refusal of the insurance company to advance
additional funds. The insurance carrier has ceased making rental interruption
insurance payments and the lender has declared a default. The Local General
Partner of the B & V Local Partnership has taken the position that the insurance
company has defaulted under its obligations to fully fund the reconstruction of
the property and make required rental interruption insurance payments.
Accordingly, Registrant is pursuing a lawsuit against the insurance company in
State court. The Local General Partner of the B & V Local Partnership has agreed
with the lender and Registrant to effect a plan of action. The objectives of the
plan are to seek the protection of the bankruptcy court, stop the City of
Homestead's demolition process, complete reconstruction of the buildings,
preserve the Low-income Tax Credits and avoid foreclosure by working with the
lender and allowing the B & V Local Partnership to pursue litigation remedies
against the insurance companies. As of May 1, 1996, 52 rental units are
completed and occupied. According to the plan of action, the B & V Local
Partnership filed a petition of bankruptcy under Chapter 11 of the Bankruptcy
Code on November 21, 1994. The bankruptcy court decided to have the action
against the contractor and its bonding company settled in binding arbitration
rather than through a bankruptcy proceeding. Accordingly, the B & V Local
Partnership has commenced an action directly against the contractor and the
contractor's bonding company. Each of the parties (the B & V Local Partnership,
the insurance company, the contractor and the contractor's bonding company)
agreed to a voluntary nonbinding mediation process. Lastly, as previously
reported, the City of Homestead filed an action in order to take four buildings
comprising 32 rental units by eminent domain proceeding. Effective April, 1996,
the City of Homestead was awarded such buildings pursuant to a quick-take
proceeding and in June, 1996, the B & V Local Partnership accepted a settlement
offer from the City of Homestead in the amount of $280,000 plus legal costs.
Subject to lender approval, such proceeds will be utilized toward the
rehabilitation of remaining rental units. As a result of the quick-take of the
buildings by the City of Homestead, Registrant will incur a recapture of
Low-income Tax Credits taken through December, 1995 of approximately $163,000
(representing approximately $4 per Unit) and will be unable to utilize future
Low-income Tax Credits associated with such apartments of approximately $188,000
(representing approximately $5 per Unit), for the period January, 1996 through
1998. Because of the outstanding matters, including those associated with the
bankruptcy plan, there can be no assurance that the Local General Partner of the
B & V Local Partnership will eventually be successful in implementing this plan
and reconstructing the remaining rental units. If it is not successful, the
partners of Registrant could suffer additional partial recapture of previous
Low-income Tax Credits and a reduction of future Low-income Tax Credits
generated by the B & V Local Partnership. A disaster of this scale is an unusual
event. Because the magnitude of destruction caused by Hurricane Andrew in
Southern Florida has limited precedent it is not possible to determine at this
time the final economic impact resulting from Hurricane Andrew on the B & V
Local Partnership, even if reconstructed.
The General Partner has taken the position that temporary vacancies do not
result in either a loss or delay of Low-income Tax Credits while attempts to
conduct repairs are being made and, except for the units taken through eminent
domain, Registrant may continue to utilize the Low-income Tax Credits without
interruption. However, Registrant's tax professionals have recently informed
Registrant that, based upon a 1995 revenue procedure, the Internal Revenue
Service could challenge the position taken by Registrant concerning the
uninterrupted utilization of the Low-income Tax Credits, with respect to rental
units not completed as of December 31, 1994. In addition, if any of the rental
units were to be sold or not reconstructed, it would result in a reduction of
future Low-income Tax Credits and partial recapture of previous Low-income Tax
Credits with respect to those rental units. In addition, the management agent
was notified on June 14, 1996 by the monitoring agent for the Florida Housing
Finance Agency that, as a result of rental units not in service, a portion of
the property is considered to be in non-compliance which could result in
additional recapture or the inability to utilize future Low-income Tax Credits.
Of Registrant's total annual Low-income Tax Credits, approximately $387,000 was
allocated from the B & V Local Partnership (prior to the loss of units taken
through eminent domain) which represents approximately 6.4% of the total annual
Low-income Tax Credits. The Low-income Tax Credits with respect to the B & V
Local Partnership are scheduled to expire in 1998.
The B & V Local Partnership has deferred the recognition of the proceeds of the
rental interruption insurance (principally received in 1993) and is not accruing
for additional rental interruption insurance which is part of its claim for
damages against the insurance company (see discussion above), while recognizing
expenses currently. In addition, the B & V Local Partnership is not recognizing
full depreciation expense while the complex is in the process of being
reconstructed. Registrant's investment balance in the B & V Local Partnership is
zero as of March 30, 1996.
As part of the overall plan and arrangement with the Local General Partner of
the B & V Local Partnership (see discussion above), during the year ended March
30, 1995, Registrant acquired a 98% limited partnership equity interest in B & V
Phase I, Ltd. (the "B & V Phase I Local Partnership"), which owns a 97-unit,
Section 8 assisted apartment complex located in Homestead, Florida, from
principals of the Local General Partner of the B & V Local Partnership. The
purpose of acquiring an interest in the B & V Phase I Local Partnership was to
mitigate potential adverse consequences of a loss of Low-income Tax Credits in
the event that the rebuilding of the apartment complex owned by the B & V Local
Partnership is not completed. Under the terms of the limited partnership
agreement between Registrant and the B & V Phase I Local Partnership, Registrant
made its full capital contribution of $140,000 (by utilizing reserves) in
October, 1994 with total Low-income Tax Credits expected to be allocated to
Registrant over the period 1994 through 1998 of approximately $499,000. In
August, 1992, the B & V Phase I Local Partnership was also damaged by Hurricane
Andrew. As of May 1, 1996, all 97 of the units were complete and occupied. Under
an agreement with the lender, the B & V Phase I Local Partnership was to
commence paying debt service in January, 1995 which was to coincide with the
completion of construction. However, due to construction delays, the B & V Phase
I Local Partnership has not commenced making such payments. As a result, the
lender has declared a default under the terms of the mortgage and the Local
General Partner of the B & V Phase I Local Partnership is having discussions
with the lender regarding a loan restructuring. Registrant's investment balance
in the B & V Phase I Local Partnership, after the allocation of cumulative
equity losses, is zero as of March 30, 1996. Of Registrant's total annual
Low-income Tax Credits, approximately 1.3% is allocated from the B & V Phase I
Local Partnership.
Results of Operations.
Registrant's operating results are dependent upon the operating results of the
Local Partnerships and are significantly impacted by the Local Partnerships'
policies. Registrant accounts for its Investments in Local Partnerships in
accordance with the equity method of accounting. Under the equity method of
accounting, the investment is carried at cost and is adjusted for Registrant's
share of the Local Partnerships' results of operations and by any cash
distributions received. Equity in loss of each Investment in Local Partnership
allocated to Registrant is recognized to the extent of such Local Partnership
investment balance, as recorded by Registrant. Any equity in loss in excess of
any such Local Partnership investment balance is allocated to other partners'
capital in each such Local Partnership. As a result, the equity in loss of
Investment in Local Partnerships is expected to decrease as Registrant's
investment balances in the respective Local Partnerships become zero.
Distributions received subsequent to the elimination of an investment balance
for any such Local Partnership are recorded as other income from Local
Partnerships in the accompanying financial statements.
Cumulative losses and cash distributions in excess of Investment in Local
Partnerships may result from a variety of circumstances, including a Local
Partnership's accounting policies, subsidy structure, debt structure and
operating deficits, among other things. Accordingly, cumulative losses and cash
distributions in excess of the investment are not necessarily indicative of
adverse operating results of a Local Partnership. See discussion above under
Capital Resources and Liquidity regarding the Local Partnerships currently
operating below economic break even levels. In the case of the B & V Local
Partnership, losses have been exacerbated due to consequences caused by
Hurricane Andrew and the policy of recognizing expenses currently, while not
recognizing potential proceeds resulting from the claims discussed above. Such
results may be reversed in a future period, pending the outcome of the
reconstruction of the complex and results of the litigation discussed above.
Year Ended March 30, 1996.
For the year ended March 30, 1996, Registrant had a net loss of approximately
$2,426,000, which included an equity in loss of Investment in Local Partnerships
of approximately $2,241,000 for the year ended December 31, 1995. Registrant's
loss from operations for the year ended March 30, 1996 of approximately $185,000
was attributable to interest revenue of approximately $269,000 and other income
from Local Partnerships of $5,000, exceeded by operating expenses of
approximately $459,000. Interest income for future periods is expected to
decline as investments in bonds mature and are utilized for Registrant's
operating expenses.
The Local Partnerships' net loss of approximately $4,837,000 for the year ended
December 31, 1995 was attributable to rental and other revenue of approximately
$15,977,000, exceeded by operating and interest expenses of approximately
$16,664,000 and approximately $4,150,000 of depreciation and amortization
expenses. The Local Partnerships' net loss for the year ended December 31, 1995
includes (i) the recorded loss of the B & V Local Partnership of approximately
$659,000 and (ii) accrued Non-Mandatory Interest charges of approximately
$492,000, and does not include the recognition of the debt subsidy of Cobbet
Hill Associates Limited Partnership (the "Cobbet Local Partnership") under the
Massachusetts State Housing Assistance for Rental Production program ("SHARP")
(which is recorded as debt rather than revenue) in the amount of approximately
$314,000 or the recorded principal amortization on mortgages payable of
approximately $568,000.
Year Ended March 30, 1995.
For the year ended March 30, 1995, Registrant had a net loss of approximately
$2,499,000, which included an equity in loss of Investment in Local Partnerships
of approximately $2,320,000 for the year ended December 31, 1994. Registrant's
loss from operations for the year ended March 30, 1995 of approximately $179,000
was attributable to interest revenue of approximately $287,000 and other income
from Local Partnerships of approximately $2,000, exceeded by operating expenses
of approximately $468,000.
The Local Partnerships' net loss of approximately $4,570,000 for the year ended
December 31, 1994 was attributable to rental and other revenue of approximately
$15,255,000, exceeded by operating and interest expenses of approximately
$15,837,000 and approximately $3,988,000 of depreciation and amortization
expenses. The Local Partnerships' net loss for the year ended December 31, 1994
includes (i) the recorded loss of the B & V Local Partnership of approximately
$913,000 and (ii) accrued Non-Mandatory Interest charges of approximately
$384,000, and does not include the recognition of the SHARP subsidy of the
Cobbet Local Partnership in the amount of approximately $348,000 or the recorded
principal amortization on mortgages payable of approximately $626,000.
Year Ended March 30, 1994.
For the year ended March 30, 1994, Registrant had a net loss of approximately
$4,002,000, which included an equity in loss of Investment in Local Partnerships
of approximately $3,818,000 for the year ended December 31, 1993. Registrant's
loss from operations for the year ended March 30, 1994 of approximately $184,000
was attributable to interest revenue of approximately $292,000, exceeded by
operating expenses of approximately $471,000 and amortization of organization
costs of $5,000.
The Local Partnerships' net loss of approximately $4,203,000 for the year ended
December 31, 1993 was attributable to rental and other revenue of approximately
$15,303,000, exceeded by operating and interest expenses of approximately
$15,555,000 and approximately $3,951,000 of depreciation and amortization
expenses. The Local Partnerships' net loss for the year ended December 31, 1993
includes (i) the recorded loss of the B & V Local Partnership of approximately
$775,000 and (ii) accrued Non-Mandatory Interest charges of approximately
$385,000, and does not include the recognition of the SHARP subsidy of the
Cobbet Local Partnership in the amount of approximately $380,000 or the recorded
principal amortization on mortgages payable of approximately $587,000.
Year Ended March 30, 1996 versus 1995.
Registrant's operations for the year ended March 30, 1996 resulted in a net loss
of approximately $2,426,000 as compared to a net loss of approximately
$2,499,000 for the same period in 1995. The decrease in net loss is primarily
attributable to a decrease in the equity in loss of Investment in Local
Partnerships of approximately $79,000. The decrease in the equity in loss of
Investment in Local Partnerships is primarily the result of an increase in the
nonrecognition of losses in excess of Registrant's investment in Local
Partnerships of approximately $433,000, in accordance with the equity method of
accounting, partially offset by (i) an increase in repairs and maintenance
expenses and (ii) an increase in amortization expense resulting from the
write-off of particular intangible assets in connection with the mortgage
refinancing of certain Local Partnerships.
<PAGE>
Year Ended March 30, 1995 versus 1994.
Registrant's operations for the year ended March 30, 1995 resulted in a net loss
of approximately $2,499,000 as compared to a net loss of approximately
$4,002,000 for the same period in 1994. The decrease in net loss was primarily
attributable to a decrease in the equity in loss of Investment in Local
Partnerships of approximately $1,498,000. The equity in loss of Investment in
Local Partnerships decreased primarily as a result of an increase in the
nonrecognition of losses in excess of Registrant's investment in Local
Partnerships of approximately $1,792,000, in accordance with the equity method
of accounting, partially offset by (i) an additional charge of approximately
$112,000 from the B & V Local Partnership due to a settlement agreement with HUD
during the year ended December 31, 1994 and (ii) the equity in loss of the B & V
Phase I Local Partnership in its first year end owned by Registrant.
Inflation.
Inflation is not expected to have a material adverse impact on Registrant's
operations during its period of ownership of the Local Partnership Interests.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
Item 8. Financial Statements and Supplementary Data.
Table of Contents
Page
<S> <C>
Independent Auditors' Report.............................................................................................15
Balance Sheets as of March 30, 1996 and 1995.............................................................................16
Statements of Operations for the years ended March 30, 1996, 1995 and 1994...............................................17
Statements of Changes in Partners' Equity/(Deficit) for the years ended
March 30, 1996, 1995 and 1994.......................................................................................18
Statements of Cash Flows for the years ended March 30, 1996, 1995 and 1994............................................19-20
Notes to Financial Statements as of March 30, 1996, 1995 and 1994.....................................................21-36
</TABLE>
No financial statement schedules are included because of the absence of the
conditions under which they are required or because the information is included
in the financial statements or the notes thereto.
<PAGE>
Independent Auditors' Report
To the Partners
American Tax Credit Properties L.P.
We have audited the accompanying balance sheets of American Tax Credit
Properties L.P. as of March 30, 1996 and 1995, and the related statements of
operations, changes in partners' equity/(deficit) and cash flows for each of the
three years in the period ended March 30, 1996. These financial statements are
the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of American Tax Credit
Properties L.P. as of March 30, 1996 and 1995, and the results of its operations
and cash flows for each of the three years in the period ended March 30, 1996 in
conformity with generally accepted accounting principles.
/S/ REZNICK FEDDER & SILVERMAN
Bethesda, Maryland
May 8, 1996
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
BALANCE SHEETS
MARCH 30, 1996 AND 1995
Notes 1996 1995
--------------- -------------- ---------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents 3,9 $ 397,120 $ 342,688
Investments in bonds available-for-sale 4,9 3,112,049 3,171,749
Investment in Local Partnerships 5 9,464,434 11,787,392
Interest receivable 9 66,580 68,365
------------ --------------
$ 13,040,183 $ 15,370,194
=========== ===========
LIABILITIES AND PARTNERS' EQUITY/(DEFICIT)
Liabilities:
Accounts payable and accrued expenses 8,9 $ 57,961 $ 51,496
Payable to General Partner 6,8,9 43,861 43,861
------------- -------------
101,822 95,357
------------ -------------
Commitments and contingencies 5,8
Partners' equity/(deficit): 2,4
General Partner (238,223) (213,968)
Limited Partners, $1,000 stated value per Unit (41,286 Units
of Limited Partnership Interest outstanding) 12,985,812 15,387,065
Unrealized gain on investments in bonds available-for-sale, net 190,772 101,740
------------ ------------
12,938,361 15,274,837
----------- -----------
$ 13,040,183 $ 15,370,194
=========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 30, 1996, 1995 and 1994
1996 1995 1994
------------- -------------- --------------
<S> <C> <C> <C>
REVENUES
Interest $ 269,591 $ 286,748 $ 291,695
Other income from Local Partnerships 5,000 2,500
------------- ------------- -----------
TOTAL REVENUES 274,591 289,248 291,695
----------- ------------- -----------
EXPENSES
Administration fees 8 183,723 183,723 183,723
Management fee 6,8 175,466 175,466 175,466
Professional fees 72,855 81,932 76,722
Printing, postage and other 27,097 27,361 35,356
Amortization 5,000
------------ ------------ -------------
TOTAL EXPENSES 459,141 468,482 476,267
------------ ------------ ------------
Loss from operations (184,550) (179,234) (184,572)
Equity in loss of Investment in Local Partnerships 5 (2,240,958) (2,319,646) (3,817,612)
---------- ---------- ----------
NET LOSS $(2,425,508) $(2,498,880) $(4,002,184)
========== ========== ==========
NET LOSS ATTRIBUTABLE TO 2
General Partner $ (24,255) $ (24,989) $ (40,022)
Limited Partners (2,401,253) (2,473,891) (3,962,162)
---------- ---------- ----------
$(2,425,508) $(2,498,880) $(4,002,184)
========== ========== ==========
NET LOSS per Unit of Limited Partnership
Interest (41,286 Units of Limited Partnership
Interest) $ (58.16) $ (59.92) $ (95.97)
============= ============= ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY/(DEFICIT)
YEARS ENDED MARCH 30, 1996, 1995 and 1994
Unrealized Gain on
Investments in
Bonds
General Partner Limited Partners Available-For-Sale, Total
Net
<S> <C> <C> <C> <C>
Partners' equity/(deficit), March 30, 1993 $ (148,957) $21,823,118 $ $21,674,161
Net loss (40,022) (3,962,162) (4,002,184)
---------- ----------- --------------- -----------
Partners' equity/(deficit), March 30, 1994 (188,979) 17,860,956 17,671,977
Net loss (24,989) (2,473,891) (2,498,880)
Unrealized gain on investments in bonds
available-for-sale, net 101,740 101,740
--------------- ------------------ ---------- ------------
Partners' equity/(deficit), March 30, 1995 (213,968) 15,387,065 101,740 15,274,837
Net loss (24,255) (2,401,253) (2,425,508)
Change in unrealized gain on investments in
bonds available-for-sale, net 89,032 89,032
--------------- ----------------- ----------- -------------
Partners' equity/(deficit), March 30, 1996 $ (238,223) $12,985,812 $ 190,772 $12,938,361
========= ========== ========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 30, 1996, 1995 and 1994
1996 1995 1994
------------- -------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received $ 269,368 $ 293,054 $ 296,723
Amortization of investments in bonds 16,740 16,939 16,115
Cash paid for:
printing, postage and other expenses (26,876) (30,005) (35,278)
professional fees (66,611) (78,176) (76,722)
administration fees (183,723) (183,723) (183,723)
management fee (175,466) (175,466) (175,466)
---------- ---------- ----------
Net cash used in operating activities (166,568) (157,377) (158,351)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Local Partnership (140,000)
Cash distributions from Local Partnerships (includes $5,000
and $2,500 of other income from Local Partnerships for
the years ended March 30, 1996 and 1995) 87,000 89,473 65,146
Maturity/redemption of bonds 134,000 427,000 23,000
---------- ---------- -----------
Net cash provided by investing activities 221,000 376,473 88,146
---------- ---------- -----------
Net increase/(decrease) in cash and cash equivalents 54,432 219,096 (70,205)
Cash and cash equivalents at beginning of year 342,688 123,592 193,797
---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 397,120 $ 342,688 $ 123,592
========== ========== ==========
SIGNIFICANT NON-CASH INVESTING ACTIVITIES
Unrealized gain on investments in bonds
available-for-sale, net $ 89,032 $ 101,740
=========== ==========
- - ------------------------------------------------------------------- -------------------- -------------------- ---------------------
See reconciliation of net loss to net cash used in operating activities on the
following page.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF CASH FLOWS - (Continued)
YEARS ENDED MARCH 30, 1996, 1995 and 1994
1996 1995 1994
------------- -------------- ---------
<S> <C> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING
ACTIVITIES
NET LOSS $(2,425,508) $(2,498,880) $(4,002,184)
---------- ---------- ----------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING
ACTIVITIES
Equity in loss of Investment in Local Partnerships 2,240,958 2,319,646 3,817,612
Gain on redemption of investment in bonds (2,008)
Amortization expense 5,000
Amortization of investments in bonds 16,740 16,939 16,115
Other income from Local Partnerships (5,000) (2,500)
Increase in accounts payable and accrued expenses 6,465 1,112 78
Decrease in interest receivable 1,785 6,306 5,028
-------------- -------------- --------------
Total adjustments 2,258,940 2,341,503 3,843,833
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES $ (166,568) $ (157,377) $ (158,351)
=========== =========== ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 30, 1996, 1995 and 1994
1. Organization, Purpose and Summary of Significant Accounting Policies
American Tax Credit Properties L.P. (the "Partnership") was formed on February
12, 1988 and the Certificate of Limited Partnership of the Partnership was filed
under the Delaware Revised Uniform Limited Partnership Act. There was no
operating activity until admission of the limited partners on August 19, 1988.
The Partnership was formed to invest primarily in leveraged low-income
multifamily residential complexes (the "Property" or "Properties") which qualify
for the low-income tax credit established by Section 42 of the Tax Reform Act of
1986 (the "Low-income Tax Credit"), through the acquisition of limited
partnership equity interests (the "Local Partnership Interests") in partnerships
(the "Local Partnership" or "Local Partnerships") that are the owners of the
Properties. The Partnership has invested in one Property which also qualifies
for the historic rehabilitation tax credit in accordance with Section 48(g) of
the Internal Revenue Code of 1986. Richman Tax Credit Properties L.P. (the
"General Partner") was formed on February 10, 1988 to act as the sole general
partner of the Partnership.
Basis of Accounting and Fiscal Year
The Partnership's records are maintained on the accrual basis of accounting for
both financial reporting and tax purposes. For financial reporting purposes, the
Partnership's fiscal year ends March 30 and its quarterly periods end June 29,
September 29 and December 30. The Local Partnerships have a calendar year for
financial reporting purposes. The Partnership and the Local Partnerships each
have a calendar year for income tax purposes.
The Investment in Local Partnerships is recorded in accordance with the equity
method of accounting (see Note 5). Under the equity method of accounting, the
investment is carried at cost and is adjusted for the Partnership's share of the
Local Partnership's results of operations and by any cash distributions
received. Equity in loss of each Investment in Local Partnership allocated to
the Partnership is recognized to the extent of such Local Partnership's
investment balance, as recorded by the Partnership. Any equity in loss in excess
of any such Local Partnership's investment balance is allocated to other
partners' capital in each such Local Partnership. Previously unrecognized equity
in loss of any Local Partnership is recognized in the fiscal year in which
equity in income is earned by such Local Partnership. Distributions received
subsequent to the elimination of an investment balance for any such Local
Partnership are recorded as other income from Local Partnerships.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Cash Equivalents
For purposes of the statements of cash flows, the Partnership considers all
highly liquid investments purchased with an original maturity of three months or
less at the date of acquisition to be cash equivalents. Cash and cash
equivalents are stated at cost which approximates market value.
Organization Costs
Organization costs were amortized on a straight-line basis over five (5)
years;such costs became fully amortized during the year ended March 30, 1994.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
1. Organization, Purpose and Summary of Significant Accounting Policies
(continued)
Investments in Bonds Available-For-Sale
Investments in bonds classified as available-for-sale represent investments in
bonds that the Partnership intends to hold for an indefinite period of time but
not necessarily to maturity. Any decision to sell an investment classified as
available-for-sale would be based on various factors, including significant
movements in interest rates and liquidity needs. Investments in bonds
available-for-sale are carried at estimated fair value and unrealized gains or
losses are reported as a separate component of partners' equity/(deficit).
Premium/Discount on Investments
Premiums and discounts on investments in bonds available-for-sale are
amortized/accreted using the straight-line method over the life of the
investment. Amortized premiums offset interest income, while the accretion of
discounts and zero coupon bonds are included in interest income. Unamortized
premiums and unaccreted discounts of investments redeemed prior to maturity are
offset against, or included in, interest income.
Gain/Loss on Redemption/Sale of Investments
Realized gain/loss on redemption/sale of investments in bonds available-for-sale
are included in, or offset against, interest income on the basis of the adjusted
cost of each specific investment redeemed or sold.
Income Taxes
No provision for income taxes has been made because all income, losses and tax
credits are allocated to the partners for inclusion in their respective tax
returns. In accordance with Statement of Financial Accounting Standard ("SFAS")
No. 109, "Accounting for Income Taxes," the Partnership has included in Note 7
certain disclosures related to differences in the book and tax bases of
accounting.
Reclassifications
Certain reclassifications of amounts have been made to conform to the current
year presentation.
2. Capital Contributions
On May 11, 1988, the Partnership commenced the offering of units (the "Units")
through Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Selling
Agent"). On August 19, 1988 and November 15, 1988, under the terms of the
Amended and Restated Agreement of Limited Partnership of the Partnership (the
"Partnership Agreement"), the General Partner admitted limited partners to the
Partnership with aggregate limited partners' capital contributions amounting to
$41,286,000. The Partnership received a capital contribution of $100 from the
General Partner.
In connection with the offering of Units, the Partnership incurred syndication
costs of $1,478,372, of which $75,000 was capitalized as organization costs and
$1,403,372 was charged to the limited partners' equity. In addition, the
Partnership paid selling commissions of $3,302,880 to the Selling Agent upon
admission of the limited partners, which was charged to the limited partners'
equity.
Net loss is allocated 99% to the limited partners and 1% to the General Partner
in accordance with the Partnership Agreement.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
3. Cash and Cash Equivalents
As of March 30, 1996, the Partnership has $397,120 in cash and cash equivalents,
which are deposited in interest-bearing accounts with an institution which is
not insured by the Federal Deposits Insurance Corporation.
4. Investments in Bonds Available-For-Sale
The Partnership carries its investments in bonds as available-for-sale because
such investments are used to facilitate and provide flexibility for the
Partnership's obligations, including resolving unforeseen contingencies which
may arise in connection with the Local Partnerships. Investments in bonds
available-for-sale are reflected in the accompanying balance sheets at estimated
fair value.
As of March 30, 1996, investments in bonds available-for-sale are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
<S> <C> <C> <C> <C>
Description
Corporate debt securities:
Within one year $ 90,548 $ 898 $ (506) $ 90,940
After one year through five years 263,344 2,397 -- 265,741
After five years through ten years 641,984 1,052 (22,167) 620,869
After ten years 454,720 7,664 (7,444) 454,940
------------ ------------ ----------- -----------
1,450,596 12,011 (30,117) 1,432,490
----------- ----------- ---------- ----------
U.S. Treasury debt securities:
Within one year 44,998 100 -- 45,098
After one year through five years 185,574 10,973 -- 196,547
After five years through ten years 1,058,525 208,372 -- 1,266,897
----------- ----------- -------------- ----------
1,289,097 219,445 -- 1,508,542
----------- ----------- -------------- ----------
U.S. government and agency securities:
After ten years 181,584 -- (10,567) 171,017
------------ ---------------- ---------- -----------
181,584 -- (10,567) 171,017
------------ ---------------- ---------- -----------
$ 2,921,277 $ 231,456 $ (40,684) $ 3,112,049
=========== =========== ========== ==========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 AND 1994
4. Investments in Bonds Available-For-Sale (continued)
As of March 30, 1995, investments in bonds available-for-sale are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
<S> <C> <C> <C> <C>
Description
Corporate debt securities:
After one year through five years $ 219,758 $ -- $ (3,886) $ 215,872
After five years through ten years 575,795 -- (25,554) 550,241
After ten years 672,530 4 (31,631) 640,903
---------- -------------- ---------- ----------
1,468,083 4 (61,071) 1,407,016
--------- -------------- ---------- ---------
U.S. Treasury debt securities:
Within one year 37,000 185 -- 37,185
After one year through five years 229,821 11,215 -- 241,036
After five years through ten years 1,169,824 171,382 -- 1,341,206
--------- ---------- -------------- ---------
1,436,645 182,782 -- 1,619,427
--------- ---------- -------------- ---------
U.S. government and agency securities:
After ten years 165,281 -- (19,975) 145,306
------------ ---------------- ---------- ----------
165,281 -- (19,975) 145,306
------------ ---------------- ---------- ----------
$ 3,070,009 $ 182,786 $ (81,046) $3,171,749
=========== =========== ========== =========
</TABLE>
5. Investment in Local Partnerships
As of March 30, 1996, the Partnership generally owns a 99% interest in the
following Local Partnerships:
1. 4611 South Drexel Limited Partnership;
2. B & V, Ltd.;
3. B & V Phase I, Ltd.;
4. Blue Hill Housing Limited Partnership;
5. Cityside Apartments, L.P.;
6. Cobbet Hill Associates Limited Partnership;
7. Dunbar Limited Partnership;
8. Dunbar Limited Partnership No. 2;
9. Erie Associates Limited Partnership;
10. Federal Apartments Limited Partnership;
11. Golden Gates Associates;
12. Grove Park Housing, A California Limited Partnership;
13. Gulf Shores Apartments Ltd.;
14. Hilltop North Associates, A Virginia Limited Partnership;
15. Madison-Bellefield Associates;
16. Pine Hill Estates Limited Partnership;
17. Santa Juanita Limited Dividend Partnership L.P.
(the "Santa Juanita Local Partnership");
18. Vista del Mar Limited Dividend Partnership L.P. and
19. Winnsboro Homes Limited Partnership.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 AND 1994
5. Investment in Local Partnerships (continued)
Although the Partnership generally owns a 98.9%-99% limited partnership equity
interest in the Local Partnerships, the Partnership and American Tax Credit
Properties II L.P. ("ATCP II"), a Delaware limited partnership and an affiliate
of the Partnership, together, in the aggregate, acquired a 99% Local Partnership
Interest in the Santa Juanita Local Partnership; the ownership percentages of
the Partnership and ATCP II for the Santa Juanita Local Partnership are 34.64%
and 64.36%, respectively.
The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico. The required holding period of each Property, in order to avoid
Low-income Tax Credit recapture, is fifteen years from the year in which the
Low-income Tax Credits commence on the last building of the Property (the
"Compliance Period"). The rents of these Properties are controlled by federal
and state agencies pursuant to applicable laws and regulations (see Note 8). In
connection with the purchase of Local Partnership Interests, the Partnership
made capital contributions in the aggregate amount of $34,510,290. As of
December 31, 1995, the Local Partnerships have outstanding mortgage loans
payable totaling approximately $83,354,000 and accrued interest payable on such
loans totaling approximately $3,744,000, which are secured by security interests
and liens common to mortgage loans on the Local Partnerships' real property and
other assets.
Equity in loss of Investment in Local Partnerships is limited to the
Partnership's investment balance in each Local Partnership; any such excess is
applied to other partners' capital in any such Local Partnership (see Note 1).
The amount of such excess losses applied to other partners' capital was
$2,520,695, $2,088,012 and $296,197 for the years ended December 31, 1995, 1994
and 1993, respectively, as reflected in the combined statements of operations of
the Local Partnerships reflected herein Note 5.
The combined audited balance sheets of the Local Partnerships as of December 31,
1995 and 1994 and the combined audited statements of operations of the Local
Partnerships for the years ended December 31, 1995, 1994 and 1993 are reflected
on pages 26 and 27, respectively.
<PAGE>
- - --------------------------------------------------------------------------------
AMERICAN TAX CREDIT PROPERTIES L.P.
- - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
5. Investment in Local Partnerships (continued)
The combined balance sheets of the Local Partnerships as of December 31, 1995
and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
---------------- -----------
<S> <C> <C>
ASSETS
Cash and other investments $ 1,304,492 $ 1,555,469
Rental receivable 165,626 138,973
Escrow deposits and reserves 3,640,218 3,333,945
Land 4,476,955 4,476,955
Buildings and improvements (net of accumulated depreciation of $27,836,776
and $23,896,741) 88,484,487 91,413,927
Intangible assets (net of accumulated amortization of $736,962 and $837,033)
2,029,039 1,715,659
Other 862,904 1,237,050
-------------- -------------
$100,963,721 $103,871,978
=========== ===========
LIABILITIES AND PARTNERS' EQUITY/(DEFICIT)
Liabilities:
Accounts payable and accrued expenses $ 1,175,581 $ 985,414
Due to related parties 5,144,533 5,810,677
Mortgage loans 83,354,276 82,902,618
Notes payable 1,017,151 100,724
Accrued interest 3,744,233 2,335,271
Other 2,103,775 2,397,835
------------- -------------
96,539,549 94,532,539
------------ ------------
Partners' equity/(deficit):
American Tax Credit Properties L.P.:
Capital contributions, net of distributions 34,007,639 34,089,417
Cumulative loss (24,525,705) (22,284,747)
------------ ------------
9,481,934 11,804,670
------------- -------------
General partners and other limited partners, including ATCP II:
Capital contributions, net of distributions 362,230 358,444
Cumulative loss (5,419,992) (2,823,675)
------------- -------------
(5,057,762) (2,465,231)
------------- -------------
4,424,172 9,339,439
-------------- --------------
$100,963,721 $103,871,978
=========== ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
5. Investment in Local Partnerships (continued)
The combined statements of operations of the Local Partnerships for the
years ended December 31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------------- ----------------- ----------
<S> <C> <C> <C>
REVENUES
Rental $ 15,588,130 $ 14,904,622 $ 15,031,933
Interest and other 388,854 349,926 271,354
------------- ------------- -------------
Total Revenues 15,976,984 15,254,548 15,303,287
----------- ----------- -----------
EXPENSES
Administrative 2,343,712 2,263,812 2,197,255
Utilities 1,273,740 1,264,942 1,149,372
Operating, maintenance and other 3,358,571 3,020,721 3,198,239
Taxes and insurance 1,916,594 1,815,880 1,645,229
Interest (including amortization of
$179,525, $108,060 and $119,777) 7,951,364 7,579,510 7,485,408
Depreciation 3,970,278 3,879,964 3,830,972
----------- ----------- ------------
Total Expenses 20,814,259 19,824,829 19,506,475
----------- ----------- ------------
NET LOSS $ (4,837,275) $ (4,570,281) $ (4,203,188)
=========== =========== ===========
NET LOSS ATTRIBUTABLE TO
American Tax Credit Properties L.P. $ (2,240,958) $ (2,319,646) $ (3,817,612)
General partners and other limited
partners, including ATCP II, which includes specially allocated
items of income to certain general partners of $31,511, $71,252 and
$10,684 and $2,520,695, $2,088,012 and $296,197 of American Tax
Credit Properties L.P.
equity in loss in excess of investment (2,596,317) (2,250,635) (385,576)
---------- ---------- -----------
$ (4,837,275) $ (4,570,281) $ (4,203,188)
=========== =========== ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
5. Investment in Local Partnerships (continued)
Investment activity with respect to each Local Partnership for the year ended
March 30, 1996 is as follows:
<TABLE>
<CAPTION>
Cash
Partnership's Cash distribution
Investment in equity in distributions classified as Investment in
Local (loss)/income for received during other income Local
Partnership the year ended the year ended during the year Partnership
Name of Local Partnership balance as of December 31, March 30, ended March 30, balance as of
- - -------------------------
March 30, 1995 1995 1996 1996 March 30, 1996
-------------- --------------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C>
4611 South Drexel Limited Partnership $ 46,818 $ (46,818) (1) $ -- $ -- $ --
B & V, Ltd. -- -- (2) -- -- --
B & V Phase I, Ltd. 64,618 (64,618) (1) -- -- --
Blue Hill Housing Limited Partnership 2,637,800 (316,326) (2,500) -- 2,318,974
Cityside Apartments, L.P. 3,489,721 (438,940) -- -- 3,050,781
Cobbet Hill Associates Limited Partnership -- -- (2) -- -- --
Dunbar Limited Partnership 295,251 (104,217) (2,500) -- 188,534
Dunbar Limited Partnership No. 2 446,184 (204,582) (2,500) -- 239,102
Erie Associates Limited Partnership 408,960 (90,068) (2,500) -- 316,392
Federal Apartments Limited Partnership 467,556 (381,534) (5,000) -- 81,022
Golden Gates Associates -- -- (2) (5,000) 5,000 --
Grove Park Housing, A California Limited
Partnership -- -- (2) -- -- --
Gulf Shores Apartments Ltd. 40,421 (40,421) (1) -- -- --
Hilltop North Associates, A Virginia
Limited Partnership 960,244 (51,816) (49,500) -- 858,928
Madison-Bellefield Associates 824,261 18,204 (5,000) -- 837,465
Pine Hill Estates Limited Partnership 156,799 (84,545) (10,000) -- 62,254
Santa Juanita Limited Dividend Partnership 179,363 (28,483) -- -- 150,880
L.P.
Vista del Mar Limited Dividend Partnership 1,654,830 (361,707) -- -- 1,293,123
L.P.
Winnsboro Homes Limited Partnership 114,566 (45,087) (2,500) -- 66,979
------------ ----------- ----------- --------------- ------------
$11,787,392 $(2,240,958) $ (87,000) $ 5,000 $ 9,464,434
========== ========== ========= =========== ==========
</TABLE>
- - --------------------------------------------------------------------------------
(1)The Partnership's equity in loss of an investment in a Local Partnership is
limited to the remaining investment balance.
(2)Additional equity in loss of investment is not allocated to the Partnership
until equity in income is earned.
<PAGE>
- - --------------------------------------------------------------------------------
AMERICAN TAX CREDIT PROPERTIES L.P.
- - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
5. Investment in Local Partnerships (continued)
Investment and capital contribution activity with respect to each Local
Partnership for the year ended March 30, 1995 is as follows:
<TABLE>
<CAPTION>
Cash
Capital Cash distribution
Investment in contribution Partnership's distributions classified as Investment
Local obligation paid equity in loss received other income in Local
Partnership during the year for the year during the during the Partnership
balance as of ended ended December year ended year ended balance as of
March 30, March 30, 31, March 30, March 30, March 30,
1994 1995 1994 1995 1995 1995
<S> <C> <C> <C> <C> <C> <C>
Name of
Local
Partnership
4611 $ 99,124 $ -- $ (52,306) $ -- $ -- $ 46,818
South
Drexel
Limited
Partnership
B & V, 190,105 -- (190,105)(1) -- -- --
Ltd.
B & V -- 140,000 (75,382) -- -- 64,618
Phase
I, Ltd.
Blue 2,883,716 -- (245,916) -- -- 2,637,800
Hill
Housing
Limited
Partnership
Cityside 3,966,475 -- (474,254) (2,500) -- 3,489,721
Apartments,
L.P.
Cobbet
Hill -- -- -- (2) -- -- --
Associates
Limited
Partnership
Dunbar 456,685 -- (158,934) (2,500) -- 295,251
Limited
Partnership
Dunbar 550,573 -- (101,889) (2,500) -- 446,184
Limited
Partnership
No. 2
Erie 446,772 -- (35,312) (2,500) -- 408,960
Associates
Limited
Partnership
Federal 864,238 -- (396,682) -- -- 467,556
Apartments
Limited
Partnership
Golden -- -- -- (2) (2,500) 2,500 --
Gates
Associates
Grove
Park 49,425 -- (49,425) (1) -- -- --
Housing,
A
California
Limited
Partnership
Gulf 86,358 -- (39,459) (6,478) -- 40,421
Shores
Apartments
Ltd.
Hilltop
North 1,014,844 -- (6,605) (47,995) -- 960,244
Associates,
A
Virginia
Limited
Partnership
Madison-Bellefi929,452 -- (100,191) (5,000) -- 824,261
Associates
Pine 247,200 -- (80,401) (10,000) -- 156,799
Hill
Estates
Limited
Partnership
Santa
Juanita 197,856 -- (18,493) -- -- 179,363
Limited
Dividend
Partnership
L.P.
Vista
del 1,826,496 -- (171,666) -- -- 1,654,830
Mar
Limited
Dividend
Partnership
L.P.
Winnsboro 244,692 -- (122,626) (7,500) -- 114,566
------------ ------------ ----------- ----------- ------------ -----------
Homes
Limited
Partnership
$14,054,011 $ 140,000 $(2,319,646) $ (89,473) $ 2,500 $11,787,392
========== ======== ========== ========== ========== ==========
</TABLE>
- - --------------------------------------------------------------------------------
(1)
The Partnership's equity in loss of an investment in a Local Partnership is
limited to the remaining investment balance.
(2)
Additional equity in loss of investment is not allocated to the Partnership
until equity in income is earned.
<PAGE>
- - --------------------------------------------------------------------------------
AMERICAN TAX CREDIT PROPERTIES L.P.
- - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
5. Investment in Local Partnerships (continued)
Investment activity with respect to each Local Partnership for the year ended
March 30, 1994 is as follows:
<TABLE>
<CAPTION>
Cash
Investment in Partnership's distributions Investment in
Local equity in received Local
Partnership (loss)/income for during the Partnership
balance as of the year ended year ended balance as of
March 30, December 31, March 30, March 30,
Name of Local Partnership 1993 1993 1994 1994
------------------------- --------------- ----------------- --------------- ---------
<S> <C> <C> <C> <C>
4611 South Drexel Limited Partnership $ 163,301 $ (64,177) $ -- $ 99,124
B & V, Ltd. 959,816 (767,211) (2,500) 190,105
Blue Hill Housing Limited Partnership 3,218,092 (331,876) (2,500) 2,883,716
Cityside Apartments, L.P. 4,424,046 (455,071) (2,500) 3,966,475
Cobbet Hill Associates Limited Partnership 770,007 (770,007) (1) -- --
Dunbar Limited Partnership 638,574 (179,389) (2,500) 456,685
Dunbar Limited Partnership No. 2 760,602 (207,529) (2,500) 550,573
Erie Associates Limited Partnership 488,065 (38,793) (2,500) 446,772
Federal Apartments Limited Partnership 1,277,457 (408,219) (5,000) 864,238
Golden Gates Associates 59,575 (57,075) (1) (2,500) --
Grove Park Housing, A California Limited Partnership 324,144 (274,719) -- 49,425
Gulf Shores Apartments Ltd. 134,829 (48,471) -- 86,358
Hilltop North Associates, A Virginia Limited 1,080,903 (41,804) (24,255) 1,014,844
Partnership
Madison-Bellefield Associates 858,216 76,236 (5,000) 929,452
Pine Hill Estates Limited Partnership 323,316 (66,116) (10,000) 247,200
Santa Juanita Limited Dividend Partnership L.P. 229,901 (31,154) (891) 197,856
Vista del Mar Limited Dividend Partnership L.P. 2,041,498 (212,502) (2,500) 1,826,496
Winnsboro Homes Limited Partnership 184,427 60,265 -- 244,692
------------ ------------ ------------ ------------
$17,936,769 $(3,817,612) $ (65,146) $14,054,011
========== ========== ======== ==========
</TABLE>
- - --------------------------------------------------------------------------------
(1) The Partnership's equity in loss of an investment in a Local
Partnership is limited to the remaining investment balance.
<PAGE>
- - --------------------------------------------------------------------------------
AMERICAN TAX CREDIT PROPERTIES L.P.
- - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
5. Investment in Local Partnerships (continued)
Property information for each Local Partnership as of December 31, 1995 is as
follows:
<TABLE>
<CAPTION>
Mortgage Buildings and Accumulated
Name of Local Partnership loans payable Land improvements depreciation
- - ------------------------------------------------------
<S> <C> <C> <C> <C>
4611 South Drexel Limited Partnership $ 1,378,616 $ 64,408 $ 1,756,833 $ (360,517)
B & V, Ltd. 5,545,119 401,220 7,931,322 (1,259,333)
B & V Phase I, Ltd. 2,638,947 190,830 2,758,628 (636,997)
Blue Hill Housing Limited Partnership 6,575,760 111,325 10,754,736 (2,626,074)
Cityside Apartments, L.P. 7,922,111 131,591 13,785,799 (3,171,904)
Cobbet Hill Associates Limited Partnership 13,449,324 504,683 15,970,046 (4,156,164)
Dunbar Limited Partnership 4,016,519 117,126 5,517,187 (1,395,320)
Dunbar Limited Partnership No. 2 4,598,856 131,920 6,339,575 (1,634,239)
Erie Associates Limited Partnership 928,022 34,844 1,760,397 (498,071)
Federal Apartments Limited Partnership 5,393,144 279,750 8,297,309 (2,037,388)
Golden Gates Associates 4,669,861 29,585 5,813,505 (1,585,439)
Grove Park Housing, A California Limited Partnership
6,952,566 956,952 7,661,757 (1,707,189)
Gulf Shores Apartments Ltd. 1,495,054 172,800 1,750,427 (478,794)
Hilltop North Associates, A Virginia Limited
Partnership 3,358,811 240,514 4,700,034 (1,011,964)
Madison-Bellefield Associates 3,720,055 245,000 5,415,347 (1,344,217)
Pine Hill Estates Limited Partnership 2,516,299 40,000 3,842,116 (869,563)
Santa Juanita Limited Dividend Partnership L.P. 1,532,327 228,718 2,190,094 (516,270)
Vista del Mar Limited Dividend Partnership L.P. 5,407,880 565,689 8,272,113 (2,151,238)
Winnsboro Homes Limited Partnership 1,255,005 30,000 1,804,038 (396,095)
------------ ------------ ------------- ------------
$ 83,354,276 $ 4,476,955 $116,321,263 $(27,836,776)
=========== ========== =========== ===========
</TABLE>
Property information for each Local Partnership as of December 31, 1994 is as
follows:
<TABLE>
<CAPTION>
Mortgage Buildings and Accumulated
Name of Local Partnership loans payable Land improvements depreciation
- - ------------------------------------------------------
<S> <C> <C> <C> <C>
4611 South Drexel Limited Partnership $ 1,386,928 $ 64,408 $ 1,756,833 $ (296,501)
B & V, Ltd. 5,545,119 401,220 7,931,322 (1,259,333)
B & V Phase I, Ltd. 2,638,947 190,830 2,691,939 (571,290)
Blue Hill Housing Limited Partnership 6,596,481 111,325 10,754,736 (2,231,799)
Cityside Apartments, L.P. 7,973,110 131,591 13,785,799 (2,667,468)
Cobbet Hill Associates Limited Partnership 13,272,921 504,683 15,967,006 (3,569,120)
Dunbar Limited Partnership 4,024,307 117,126 5,375,213 (1,198,782)
Dunbar Limited Partnership No. 2 4,607,540 131,920 6,229,688 (1,387,802)
Erie Associates Limited Partnership 946,376 34,844 1,760,397 (434,000)
Federal Apartments Limited Partnership 5,455,004 279,750 8,233,186 (1,738,493)
Golden Gates Associates 4,682,056 29,585 5,813,505 (1,368,140)
Grove Park Housing, A California Limited Partnership
6,974,227 956,952 7,661,757 (1,428,581)
Gulf Shores Apartments Ltd. 1,497,327 172,800 1,750,427 (407,351)
Hilltop North Associates, A Virginia Limited
Partnership 3,379,760 240,514 4,665,262 (880,920)
Madison-Bellefield Associates 3,781,900 245,000 5,175,152 (1,127,515)
Pine Hill Estates Limited Partnership 2,556,770 40,000 3,808,122 (710,230)
Santa Juanita Limited Dividend Partnership L.P. 1,397,271 228,718 2,172,185 (435,517)
Vista del Mar Limited Dividend Partnership L.P. 4,912,283 565,689 7,974,101 (1,858,179)
Winnsboro Homes Limited Partnership 1,274,291 30,000 1,804,038 (325,720)
----------- ----------- ------------ ------------
$ 82,902,618 $ 4,476,955 $115,310,668 $(23,896,741)
=========== ========== =========== ===========
</TABLE>
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
5. Investment in Local Partnerships (continued)
The summary of property activity during the year ended December 31, 1995 is as
follows:
<TABLE>
<CAPTION>
Net increase/(decrease)
Balance as of during the year ended Balance as of
December 31, 1994 December 31, 1995 December 31, 1995
----------------- --------------------- -----------------
<S> <C> <C> <C>
Land $ 4,476,955 $ -- $ 4,476,955
Buildings and improvements 115,310,668 1,010,595 116,321,263
-------------- ------------ --------------
119,787,623 1,010,595 120,798,218
Accumulated depreciation (23,896,741) (3,940,035) (27,836,776)
--------------- ------------ ---------------
$ 95,890,882 $ (2,929,440) $ 92,961,442
=============== ============ ===============
</TABLE>
The Partnership acquired a 99% limited partnership interest in B & V, Ltd. (the
"B & V Local Partnership"), a 190-unit complex, located in Homestead, Florida in
December, 1988. Florida was devastated by Hurricane Andrew and the Property
owned by the B & V Local Partnership sustained substantial damage. The City of
Homestead has taken, but has not acted upon, administrative action threatening
to demolish approximately 100 rental units in the B & V complex unless
reconstruction immediately commences. If demolished, the rebuilding of all such
rental units would be subject to changes in zoning by the City of Homestead and
the results of litigation remedies being pursued by the B & V Local Partnership,
discussed below. The damage to the complex is covered by property insurance. The
Local General Partner of the B & V Local Partnership, on behalf of the B & V
Local Partnership and at the insistence of the insurance company, entered into a
contract with a particular contractor to repair the damage. After some delay the
insurance company partially funded insurance proceeds to rebuild the complex and
repairs commenced; however, on or about March 30, 1994, the contractor
discontinued the repair work due to a dispute concerning costs and the refusal
of the insurance company to advance additional funds. The insurance carrier has
ceased making rental interruption insurance payments and the lender has declared
a default. The Local General Partner of the B & V Local Partnership has taken
the position that the insurance company has defaulted under its obligations to
fully fund the reconstruction of the property and make required rental
interruption insurance payments. Accordingly, the Partnership is pursuing a
lawsuit against the insurance company in State court. The Local General Partner
of the B & V Local Partnership has agreed with the lender and the Partnership to
effect a plan of action. The objectives of the plan are to seek the protection
of the bankruptcy court, stop the City of Homestead's demolition process,
complete reconstruction of the buildings, preserve the Low-income Tax Credits
and avoid foreclosure by working with the lender and allowing the B & V Local
Partnership to pursue litigation remedies against the insurance companies. As of
May 1, 1996, 52 rental units are completed and occupied. According to the plan
of action, the B & V Local Partnership filed a petition of bankruptcy under
Chapter 11 of the Bankruptcy Code on November 21, 1994. The bankruptcy court
decided to have the action against the contractor and its bonding company
settled in binding arbitration rather than through a bankruptcy proceeding.
Accordingly, the B & V Local Partnership has commenced an action directly
against the contractor and the contractor's bonding company. Each of the parties
(the B & V Local Partnership, the insurance company, the contractor and the
contractor's bonding company) agreed to a voluntary nonbinding mediation
process. Lastly, as previously reported, the City of Homestead filed an action
in order to take four buildings comprising 32 rental units by eminent domain
proceeding. Effective April, 1996, the City of Homestead was awarded such
buildings pursuant to a quick-take proceeding and in June, 1996, the B & V Local
Partnership accepted a settlement offer from the City of Homestead in the amount
of $280,000 plus legal costs. Subject to lender approval, such proceeds will be
utilized toward the rehabilitation of remaining rental units. As a result of the
quick-take of the buildings by the City of Homestead, the Partnership will incur
a recapture of Low-income Tax Credits taken through December, 1995 of
approximately $163,000 and will be unable to utilize future Low-income Tax
Credits associated with such apartments of approximately $188,000 for the period
January, 1996 through 1998. Because of the outstanding matters, including those
associated with the bankruptcy plan, there can be no assurance that the Local
General Partner of the B & V Local Partnership will eventually be successful in
implementing this plan and reconstructing the remaining rental units. If it is
not successful, the partners of the Partnership could suffer additional partial
recapture of previous Low-income Tax Credits and a reduction of future
Low-income Tax Credits generated by the B & V Local Partnership. A disaster of
this scale is an unusual event. Because the magnitude of destruction caused by
Hurricane Andrew in Southern Florida has limited precedent it is not possible to
determine at this time the final economic impact resulting from Hurricane Andrew
on the B & V Local Partnership, even if reconstructed.
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
5. Investment in Local Partnerships (continued)
The General Partner has taken the position that temporary vacancies do not
result in either a loss or delay of Low-income Tax Credits while attempts to
conduct repairs are being made and, except for the units taken through eminent
domain, the Partnership may continue to utilize the Low-income Tax Credits
without interruption. However, the Partnership's tax professionals have recently
informed the Partnership that, based upon a 1995 revenue procedure, the Internal
Revenue Service could challenge the position taken by the Partnership concerning
the uninterrupted utilization of the Low-income Tax Credits, with respect to
rental units not completed, as of December 31, 1994. In addition, if any of the
rental units were to be sold or not reconstructed, it would result in a
reduction of future Low-income Tax Credits and partial recapture of previous
Low-income Tax Credits with respect to those rental units. In addition, the
management agent was notified on June 14, 1996 by the monitoring agent for the
Florida Housing Finance Agency that, as a result of rental units not in service,
a portion of the property is considered to be in non-compliance which could
result in additional recapture or the inability to utilize future Low-income Tax
Credits. Of the Partnership's total annual Low-income Tax Credits, approximately
$387,000 was allocated from the B & V Local Partnership (prior to the loss of
units taken through eminent domain) which represent approximately 6.4% of the
total annual Low-income Tax Credits. The Low-income Tax Credits with respect to
the B & V Local Partnership are scheduled to expire in 1998.
The B & V Local Partnership has deferred the recognition of the proceeds of the
rental interruption insurance (principally received in 1993) and is not accruing
for additional rental interruption insurance which is part of its claim for
damages against the insurance company (see discussion above), while recognizing
expenses currently. In addition, the B & V Local Partnership is not recognizing
full depreciation expense while the complex is in the process of being
reconstructed. The Partnership's investment balance in the B & V Local
Partnership is zero as of March 30, 1996.
As part of the overall plan and arrangement with the Local General Partner of
the B & V Local Partnership (see discussion above), during the year ended March
30, 1995, the Partnership acquired a 98% limited partnership equity interest in
B & V Phase I, Ltd. (the "B & V Phase I Local Partnership"), which owns a
97-unit, Section 8 assisted apartment complex located in Homestead, Florida,
from principals of the Local General Partner of the B & V Local Partnership. The
purpose of acquiring an interest in the B & V Phase I Local Partnership was to
mitigate potential adverse consequences of a loss of Low-income Tax Credits in
the event that the rebuilding of the apartment complex owned by the B & V Local
Partnership is not completed. Under the terms of the limited partnership
agreement between the Partnership and the B & V Phase I Local Partnership, the
Partnership made its full capital contribution of $140,000 (by utilizing
reserves) in October, 1994 with total Low-income Tax Credits expected to be
allocated to the Partnership over the period 1994 through 1998 of approximately
$499,000. In August, 1992, the B & V Phase I Local Partnership was also damaged
by Hurricane Andrew. As of May 1, 1996, all 97 of the units were complete and
occupied. Under an agreement with the lender, the B & V Phase I Local
Partnership was to commence paying debt service in January, 1995 which was to
coincide with the completion of construction. However, due to construction
delays, the B & V Phase I Local Partnership has not commenced making such
payments. As a result, the lender has declared a default under the terms of the
mortgage and the Local General Partner of the B & V Phase I Local Partnership is
having discussions with the lender regarding a loan restructuring. The
Partnership's investment balance in the B & V Phase I Local Partnership, after
the allocation of cumulative equity losses, is zero as of March 30, 1996.
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 and 1994
6. Transactions with General Partner and Affiliates
For the years ended March 30, 1996, 1995 and 1994 the Partnership paid and/or
incurred the following amounts to the General Partner and/or affiliates in
connection with services provided to the Partnership:
<TABLE>
<CAPTION>
Years Ended March 30,
1996 1995 1994
-------------------- -------------------- ------------
<S> <C> <C> <C>
Paid/ Paid/ Paid/
incurred incurred incurred
Management fee (see Note 8) $175,466/ $175,466/ $175,466/
175,466 175,466 175,466
</TABLE>
For the years ended December 31, 1995, 1994 and 1993 the Local Partnerships paid
and/or incurred the following amounts to the General Partner and/or affiliates
in connection with services provided to the Local Partnerships:
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
-------------------- ------------------- ------------
<S> <C> <C> <C>
Paid/(received)/ Paid/(received)/ Paid/
incurred incurred incurred
Property development fee $ 74,900/ $ 19,423/ $ --/
-- -- --
Property management fee 138,326/ 81,012/ 126,006/
129,359 166,356 125,812
Insurance 162,419/ 95,981/ --/
149,673 95,981 --
Advance (2,500) (19,423) --
The property development fee was capitalized by the Local Partnerships.
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 AND 1994
7. Taxable Loss
A reconciliation of the financial statement net loss of the Partnership for the
years ended March 30, 1996, 1995 and 1994 to the tax return net loss for the
years ended December 31, 1995, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------------- ------------------- -----------
<S> <C> <C> <C>
Financial statement net loss for the years ended
March 30, 1996, 1995 and 1994 $(2,425,508) $(2,498,880) $(4,002,184)
Add/(less) net transactions occurring between:
January 1, 1993 and March 30, 1993 -- -- (50,121)
January 1, 1994 and March 30, 1994 -- (39,820) 39,820
January 1, 1995 and March 30, 1995 (58,651) 58,651 --
January 1, 1996 and March 30, 1996 35,017 -- --
------------ ---------------- -----------
Adjusted financial statement net loss for the
years ended December 31, 1995, 1994 and 1993
(2,449,142) (2,480,049) (4,012,485)
Differences arising from equity in income/(loss)
of Investment in Local Partnerships (1,981,297) (1,949,078) 456
---------- ---------- ------------
Tax return net loss for the years ended
December 31, 1995, 1994 and 1993 $(4,430,439) $(4,429,127) $(4,012,029)
========== ========== ==========
</TABLE>
The differences between the equity in the Investment in Local Partnerships for
tax return and financial reporting purposes as of December 31, 1995 and 1994 are
as follows:
<TABLE>
<CAPTION>
December 31,
1995 1994
------------- ---------
<S> <C> <C>
Investment in Local Partnerships - financial reporting $ 9,481,934 $11,804,670
Investment in Local Partnerships - tax 4,816,757 9,125,990
---------- -----------
$ 4,665,177 $ 2,678,680
========== ===========
</TABLE>
<PAGE>
AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - (Continued)
MARCH 30, 1996, 1995 AND 1994
8. Commitments and Contingencies
Pursuant to the Partnership Agreement, the Partnership is required to pay the
General Partner an annual management fee ("Management Fee") in the amount of
$175,466, subject to certain provisions of the Partnership Agreement, for its
services in connection with the management of the affairs of the Partnership.
For each of the three years ended March 30, 1996, 1995 and 1994, the Partnership
incurred a Management Fee in the amount of $175,466. An unpaid Management Fee in
the amount of $43,861 is recorded as payable to the General Partner in the
accompanying balance sheets as of March 30, 1996 and 1995.
In addition, pursuant to the Partnership Agreement, the Partnership is required
to pay ML Fund Administrators Inc., an affiliate of the Selling Agent, an annual
administration fee ("Administration Fee") in the amount of $152,758 and an
annual additional administration fee ("Additional Administration Fee"), subject
to certain provisions of the Partnership Agreement, in the amount of $30,965 for
its administrative services provided to the Partnership. For each of the three
years ended March 30, 1996, 1995 and 1994, the Partnership incurred an
Administration Fee and an Additional Administration Fee in the amounts of
$152,758 and $30,965, respectively. Such amounts are aggregated and reflected
under the caption Administration Fees in the accompanying financial statements.
Unpaid Administration Fees in the amount of $7,740 are included in accounts
payable and accrued expenses in the accompanying balance sheets as of March 30,
1996 and 1995.
The rents of the Properties, virtually all of which receive rental subsidy
payments including payments under Section 8 of Title II of the Housing and
Community Development Act of 1974 ("Section 8"), are subject to specific laws,
regulations and agreements with federal and state agencies. The subsidy
agreements expire at various times during and after the Compliance Periods of
the Local Partnerships. The United States Department of Housing and Urban
Development ("HUD") has issued a notice implementing provisions to renew Section
8 contracts expiring during HUD's fiscal year 1996, where requested by an owner,
for an additional one year term at current rent levels. At the present time,
Registrant cannot reasonably predict legislative initiatives and governmental
budget negotiations, the outcome of which could result in a reduction in funds
available for the various federal and state administered housing programs
including the Section 8 program. Such changes could adversely affect the future
net operating income and debt structure of any or all Local Partnerships
currently receiving such subsidy or similar subsidies.
9. Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial instruments is
made in accordance with the requirements of SFAS No. 107, "Disclosures about
Fair Value of Financial Instruments." The estimated fair value amounts have been
determined using available market information, assumptions, estimates and
valuation methodologies.
Cash and cash equivalents
The carrying amount reported in the balance sheets for cash and cash equivalents
approximates fair value.
Investments in bonds available-for-sale
Fair value is estimated based on bid prices published in financial newspapers
and market quotes provided by an independent service as of the balance sheet
dates.
Interest receivable
The carrying amount approximates the fair value due to the short-term nature of
the receivable.
Accounts payable and accrued expenses and payable to General Partner The
carrying amount approximates the fair value due to the short-term nature of the
obligations.
The estimated fair values of the Partnership's financial instruments as of March
30, 1996 and 1995 are disclosed elsewhere in the financial statements.
<PAGE>
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
None.
PART III.
Item 10. Directors and Executive Officers of the Registrant.
Registrant has no officers and directors. The General Partner manages
Registrant's affairs and has general responsibility and authority in all matters
affecting its business. The responsibilities of the General Partner are
currently carried out by Richman Tax. The executive officers and directors of
Richman Tax are:
Served in present
Name capacity since 1 Position held
Richard Paul Richman February 10, 1988 President and Director
David A. Salzman April 29, 1994 Vice President
Neal Ludeke February 10, 1988 Vice President and Treasurer
Gina S. Scotti February 10, 1988 Secretary
- - --------------------------------------------------------------------------------
1 Director holds office until his successor is elected and qualified. All
officers serve at the pleasure of the Director.
Richard Paul Richman, age 48, is the sole Director and President of Richman
Tax. Mr. Richman is the President and sole stockholder of Richman Group. Mr.
Richman is the Director, President and principal shareholder of WRC. Mr.
Richman is involved in the syndication and management of residential
property. Mr. Richman is also a director of Wilder Richman Resources Corp.,
an affiliate of Richman Tax and the general partner of Secured Income L.P., a
director of Wilder Richman Historic Corporation, an affiliate of Richman Tax
and the general partner of Wilder Richman Historic Properties II, L.P., a
director of Richman Tax Credits Inc., an affiliate of Richman Tax and the
general partner of the general partner of American Tax Credit Properties II
L.P., a director of Richman Housing Credits Inc., an affiliate of Richman Tax
and the general partner of the general partner of American Tax Credit
Properties III L.P. and a director of Richman American Credit Corp., an
affiliate of Richman Tax and the manager of American Tax Credit Trust, a
Delaware statutory business trust.
David A. Salzman, age 35, is a Vice President of Richman Tax. Mr. Salzman is
responsible for the acquisition and development of residential real estate for
syndication as a Vice President of acquisitions of Richman Group.
Neal Ludeke, age 38, is a Vice President and the Treasurer of Richman Tax.
Mr. Ludeke, a Vice President and Treasurer of Richman Group, is engaged
primarily in the syndication, asset management and finance operations of
Richman Group and WRC. In addition, Mr. Ludeke is a Vice President and
Treasurer of R.G. Housing Advisors Inc. ("RGHA"), an affiliate of Richman
Group. Mr. Ludeke's responsibilities in connection with RGHA include advisory
services provided to a small business investment company and various
partnership management functions.
Gina S. Scotti, age 40, is the Secretary of Richman Tax. Ms. Scotti is the
Secretary of WRC and a Vice President and the Secretary of Richman Group. As
the Director of Investor Services, Ms. Scotti is responsible for all
communications with investors.
Item 11. Executive Compensation.
Registrant has no officers or directors. Registrant does not pay the officers or
director of Richman Tax any remuneration. During the year ended March 30, 1996,
Richman Tax did not pay any remuneration to any of its officers or director.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Dominion Capital Inc., having the mailing address P.O. Box 26532, Richmond,
Virginia 23621, is the owner of 2,800 Units, representing approximately 6.8% of
all such Units. As of May 7, 1996, no person or entity, other than Dominion
Capital Inc., was known by Registrant to be the beneficial owner of more than
five percent of the Units.
Richman Tax is wholly-owned by Richard Paul Richman.
Item 13. Certain Relationships and Related Transactions.
The General Partner and certain of its affiliates are entitled to receive
certain compensation, fees, and reimbursement of expenses and have
received/earned fees for services provided to Registrant as described in Notes 6
and 8 to the audited financial statements included in Item 8 - "Financial
Statements and Supplementary Data" herein.
Transactions with General Partner and Affiliates.
The tax losses and Low-income Tax Credits generated by Registrant during the
year ended December 31, 1995 allocated to the General Partner were $44,304 and
$60,889, respectively. The tax losses and Low-income Tax Credits generated by
the General Partner during the year ended December 31, 1995 (from the allocation
of Registrant discussed above) and allocated to Richman Tax were $30,260 and
$41,403, respectively.
Indebtedness of Management.
No officer or director of the General Partner or any affiliate of the foregoing
was indebted to Registrant at any time during the year ended March 30, 1996.
<PAGE>
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Financial Statements, Financial Statement Schedules and Exhibits.
(1) Financial Statements.
See Item 8 - "Financial Statements and Supplementary Data."
(2) Financial Statement Schedules.
No financial statement schedules are included because of the absence
of the conditions under which they are required or because the
information is included in the financial statements or the notes
thereto.
(3) Exhibits.
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to
<S> <C> <C>
3.1 Certificate of Limited Partnership of Registrant Exhibit 3.2 to Amendment No. 2 to the
Registration Statement on Form S-11
dated April 29, 1988
(File No. 33-20391)
10.1 4611 South Drexel Limited Partnership Agreement Exhibit 10.3 to Form 10-Q Report
of Limited Partnership dated December 30, 1989
(File No. 0-17619)
10.2 B & V, Ltd. Fourth Amended and Restated Exhibit 10.3 to Form 8-K Report
Agreement and Certificate of Limited Partnership dated January 17, 1989
(File No. 33-20391)
10.3 B & V Phase I, Ltd. Amended and Restated Exhibit 10.1 to Form 10-Q Report
Agreement of Limited Partnership dated September 29, 1994
(File No. 0-17619)
10.4 Blue Hill Housing Limited Partnership Amended Exhibit 10.7 to Form 8-K Report
and Restated Agreement and Certificate of dated January 17, 1989
Limited Partnership (File No. 33-20391)
10.5 Cityside Apartments, L.P. Amended and Restated Exhibit 10.3 to Form 10-K Report
Agreement of Limited Partnership dated March 30, 1990
(File No. 0-17619)
10.6 Amendment No. 1 to Cityside Apartments, L.P. Exhibit 10.4 to Form 10-K Report
Amended and Restated Agreement of Limited dated March 30, 1992
Partnership (File No. 0-17619)
10.7 Amendment No. 2 to Cityside Apartments, L.P. Exhibit 10.5 to Form 10-K Report
Amended and Restated Agreement of Limited dated March 30, 1992
Partnership (File No. 0-17619)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to
<S> <C> <C>
10.8 Amendment No. 3 to Cityside Apartments, L.P. Exhibit 10.6 to Form 10-K Report
Amended and Restated Agreement of Limited dated March 30, 1992
Partnership (File No. 0-17619)
10.9 Cobbet Hill Associates Limited Partnership Exhibit 10.4 to Form 10-K Report
Amended and Restated Agreement and Certificate dated March 30, 1990
of Limited Partnership (File No. 0-17619)
10.10 Cobbet Hill Associates Limited Partnership First Exhibit 10.8 to Form 10-K Report
Amendment to Amended and Restated Agreement and dated March 30, 1993
Certificate of Limited Partnership (File No. 0-17619)
10.11 Cobbet Hill Associates Limited Partnership Exhibit 10.9 to Form 10-K Report
Second Amendment to the Amended and Restated dated March 30, 1993
Agreement and Certificate of Limited Partnership (File No. 0-17619)
10.12 Dunbar Limited Partnership Second Amended and Exhibit 10.5 to Form 10-K Report
Restated Agreement of Limited Partnership dated March 30, 1990
(File No. 0-17619)
10.13 Dunbar Limited Partnership No. 2 Second Amended Exhibit 10.6 to Form 10-K Report
and Restated Agreement of Limited Partnership dated March 30, 1990
(File No. 0-17619)
10.14 Erie Associates Limited Partnership Amended and Exhibit 10.2 to Form 10-K Report
Restated Agreement and Certificate of Limited dated March 30, 1989
Partnership (File No. 33-20391)
10.15 Federal Apartments Limited Partnership Amended Exhibit 10.8 to Form 10-K Report
and Restated Agreement of Limited Partnership dated March 30, 1990
(File No. 0-17619)
10.16 First Amendment to Federal Apartments Limited Exhibit 10.14 to Form 10-K Report
Partnership Amended and Restated Agreement of dated March 30, 1993
Limited Partnership (File No. 0-17619)
10.17 Second Amendment to Federal Apartments Limited Exhibit 10.15 to Form 10-K Report
Partnership Amended and Restated Agreement of dated March 30, 1993
Limited Partnership (File No. 0-17619)
10.18 Golden Gates Associates Amended and Restated Exhibit 10.1 to Form 8-K Report
Agreement of Limited Partnership dated January 17, 1989
(File No. 33-20391)
10.19 Grove Park Housing, A California Limited Exhibit 10.10 to Form 10-K Report
Partnership Amended and Restated Agreement of dated March 30, 1990
Limited Partnership (File No. 0-17619)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Incorporated by
Exhibit Reference to
<S> <C> <C>
10.20 Gulf Shores Apartments Ltd. Amended and Restated Exhibit 10.3 to Form 10-K Report
Agreement and Certificate of Limited Partnership dated March 30, 1989
(File No. 33-20391)
10.21 Hilltop North Associates, A Virginia Limited Exhibit 10.12 to Form 10-K Report
Partnership Amended and Restated Agreement of dated March 30, 1990
Limited Partnership (File No. 0-17619)
10.22 Madison-Bellefield Associates Amended and Exhibit 10.2 to Form 8-K Report
Restated Agreement and Certificate of Limited dated January 17, 1989
Partnership (File No. 33-20391)
10.23 Amended and Restated Articles of Partnership in Exhibit 10.2 to Form 10-Q Report
Commendam of Pine Hill Estates Limited dated December 30, 1989
Partnership (File No. 0-17619)
10.24 Santa Juanita Limited Dividend Partnership Exhibit 10.4 to Form 10-Q Report
Amended and Restated Agreement of Limited dated December 30, 1989
Partnership (File No. 0-17619)
10.25 Second Amendment of Limited Partnership of Santa Exhibit 10.23 to Form 10-K Report
Juanita Limited Dividend Partnership and dated March 30, 1994
Amendment No. 2 to the Amended and Restated (File No. 0-17619)
Agreement of Limited Partnership
10.26 Amendment No. 1 to Santa Juanita Limited Exhibit 10.1 to Form 10-Q Report
Dividend Partnership L.P. Amended and Restated dated September 29, 1995
Agreement of Limited Partnership (File No. 0-17619)
(Replaces in its entirety Exhibit 10.24 hereof.)
10.27 Amendment No. 2 to Santa Juanita Limited Exhibit 10.2 to Form 10-Q Report
Dividend Partnership L.P. Amended and Restated dated September 29, 1995
Agreement of Limited Partnership (File No. 0-17619)
10.28 Vista Del Mar Limited Dividend Partnership Exhibit 10.1 to Form 10-K Report
Amended and Restated Agreement and Certificate dated March 30, 1989
of Limited Partnership (File No. 33-20391)
10.29 Certificate of Amendment of Limited Partnership Exhibit 10.25 to Form 10-K Report
of Vista Del Mar Limited Dividend Partnership dated March 30, 1994
and Amendment No. 1 to the Amended and Restated (File No. 0-17619)
Agreement and Certificate of Limited Partnership
10.30 Amendment No. 1 to Vista del Mar Limited Exhibit 10.3 to Form 10-Q Report
Dividend Partnership L.P. Amended and Restated dated September 29, 1995
Agreement of Limited Partnership (File No. 0-17619)
(Replaces in its entirety Exhibit 10.28 hereof.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
----------
Incorporated by
---------- Exhibit Reference to
<S> <C> <C>
10.31 Amendment No. 2 to Vista del Mar Limited Exhibit 10.4 to Form 10-Q Report
Dividend Partnership L.P. Amended and Restated dated September 29, 1995
Agreement of Limited Partnership (File No. 0-17619)
10.32 Amended and Restated Articles of Partnership in Exhibit 10.1 to Form 10-Q Report
Commendam of Winnsboro Homes Limited Partnership dated December 30, 1989
(File No. 0-17619)
10.33 The B & V, Ltd. Exhibit 10.2 to Form 10-Q Report
Investment Agreement dated September 29, 1994
(File No. 0-17619)
10.34 The B & V Phase I, Ltd. Exhibit 10.3 to Form 10-Q Report
Investment Agreement dated September 29, 1994
(File No. 0-17619)
27 Financial Data Schedule
99.22 Pages 21 through 35, 51 through 75 and 89 Exhibit 28 to Form 10-K Report
through 91 of Prospectus dated May 6, 1989 filed dated March 30, 1989
pursuant to Rule 424(b)(3) under the (File No. 33-20391)
Securities Act of 1933
99.23 Pages 16 through 19 of Prospectus dated May 6, Exhibit 28.2 to Form 10-K Report
1989 filed pursuant to Rule 424(b)(3) under the dated March 30, 1990
Securities Act of 1933 (File No. 0-17619)
99.24 Supplement No. 1 dated August 11, 1988 to Exhibit 28.3 to Form 10-K Report
Prospectus dated March 30, 1991
(File No. 0-17619)
99.25 Supplement No. 2 dated September 20, 1988 to Exhibit 28.4 to Form 10-K Report
Prospectus dated March 30, 1991
(File No. 0-17619)
99.26 December 31, 1992 financial statements of Exhibit 28.26 to Form 10-K Report
Cityside Apartments, L.P. pursuant to Title 17, dated March 30, 1993
Code of Federal Regulations, Section 210.3-09 (File No. 0-17619)
99.27 December 31, 1993 financial statements of Exhibit 99.27 to Form 10-K Report
Cityside Apartments, L.P. pursuant to Title 17, dated March 30, 1994
Code of Federal Regulations, Section 210.3-09 (File No. 0-17619)
99.28 December 31, 1994 financial statements of Exhibit 99.28 to Form 10-K Report
Cityside Apartments, L.P. pursuant to Title 17, dated March 30, 1995
Code of Federal Regulations, Section 210.3-09 (File No. 0-17619)
99.29 December 31, 1995 financial statements of
Cityside Apartments, L.P. pursuant to Title 17,
Code of Federal Regulations, Section 210.3-09
</TABLE>
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by Registrant during the last quarter
of the period covered by this report.
(c) Exhibits.
See (a)(3) above.
(d) Financial Statement Schedules.
See (a)(2) above.
<PAGE>
- - --------------------------------------------------------------------------------
SIGNATURES.
- - --------------------------------------------------------------------------------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN TAX CREDIT PROPERTIES L.P.
(a Delaware limited partnership)
By: Richman Tax Credit Properties L.P.,
General Partner
by: Richman Tax Credit Properties Inc.,
general partner
Dated: June 28, 1996 /s/ Richard Paul Richman
------------- ------------------------
by: Richard Paul Richman
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C> <C>
/s/ Richard Paul Richman President, Chief Executive Officer June 28, 1996
(Richard Paul Richman) and Director of the general partner
of the General Partner
/s/ Neal Ludeke Vice President and Treasurer of the June 28, 1996
---------------------------- general partner of the General
(Neal Ludeke) Partner (Principal Financial and
Accounting Officer of Registrant)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000830159
<NAME> ATCP 1
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Mar-30-1996
<PERIOD-START> Apr-1-1995
<PERIOD-END> Mar-30-1996
<EXCHANGE-RATE> 1.000
<CASH> 397
<SECURITIES> 3112
<RECEIVABLES> 67
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13040
<CURRENT-LIABILITIES> 58
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13040
<SALES> 0
<TOTAL-REVENUES> 275
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 459
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2425)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2425)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2425)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
CITYSIDE APARTMENTS, L.P.
DECEMBER 31, 1995, 1994 AND 1993
<PAGE>
<TABLE>
<CAPTION>
Cityside Apartments, L.P.
TABLE OF CONTENTS
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS
BALANCE SHEETS 4
STATEMENTS OF OPERATIONS 6
STATEMENTS OF PARTNERS' EQUITY 7
STATEMENTS OF CASH FLOWS 8
NOTES TO FINANCIAL STATEMENTS 9
</TABLE>
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- 16 -
INDEPENDENT AUDITORS' REPORT
To the Partners
Cityside Apartments, L.P.
We have audited the accompanying balance sheets of Cityside Apartments,
L.P. as of December 31, 1995 and 1994, and the related statements of operations,
partners' equity and cash flows for the years ended December 31, 1995, 1994 and
1993. These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Cityside Apartments,
L.P. as of December 31, 1995 and 1994, and the results of its operations, the
changes in partners' equity and cash flows for the years ended December 31,
1995, 1994 and 1993, in conformity with generally accepted accounting
principles.
/S/ REZNICK FEDDER & SILVERMAN
Bethesda, Maryland
January 21, 1996
<PAGE>
<TABLE>
<CAPTION>
CITYSIDE APARTMENTS, L.P.
BALANCE SHEETS
DECEMBER 31,
ASSETS
1995 1994
---- ----
<S> <C> <C>
CURRENT ASSETS
Petty cash $ 400 $ 400
Cash in bank - operations 207,947 185,953
Cash in bank - development 1,700 366,299
Tenant accounts receivable 23,622 23,803
Accounts receivable - subsidy 12,643 15,922
Accounts receivable- insurance claim - 15,118
Prepaid taxes and insurance 42,618 39,249
Prepaid utility deposits 3,060 3,060
-------------- --------------
Total current assets 291,990 649,804
------------ ------------
DEPOSITS HELD IN TRUST - FUNDED
Tenant security deposits held 17,814 17,359
---------- ----------
RESTRICTED DEPOSITS AND FUNDED RESERVES
Mortgage escrow deposits 65,963 57,779
Reserve for replacements 153,212 126,332
Reserve for painting 21,060 20,427
Rehabilitation escrow 113,582 109,349
------------ ------------
353,817 313,887
RENTAL PROPERTY
Land 99,797 99,796
Buildings and improvements 13,802,871 13,802,871
Building equipment - portable 14,723 14,723
------------- -------------
13,917,391 13,917,390
Less accumulated depreciation 3,171,904 2,667,468
----------- -----------
10,745,487 11,249,922
OTHER ASSETS
Deposits
Mortgage costs, less accumulated amortization of
$80,428 and $69,589 255,062 265,901
------------ ------------
$11,664,170 $12,496,873
Continued on following page.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CITYSIDE APARTMENTS, L.P.
BALANCE SHEETS
(Continued)
DECEMBER 31,
1995 1994
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 3,029 $ 3,994
Accounts payable - fire loss - 48,257
Accrued interest payable 48,876 49,322
Accrued management fee 6,690 7,736
Accrued P.I.L.O.T 29,157 25,938
Due to general partners and affiliates 79,177 455,508
Rent deferred credits 642 342
Current maturities of mortgages payable 56,619 50,999
----------- -----------
Total current liabilities 224,190 642,096
---------- ----------
DEPOSITS LIABILITY
Tenant security deposits
(contra) 17,814 17,359
----------- ------------
LONG-TERM DEBT
Mortgages payable, less current maturities
7,865,492 7,922,111
Accrued interest payable 358,956 285,947
------------ ------------
8,224,448 8,208,058
CONTINGENCY - -
PARTNERS' EQUITY 3,197,718 3,629,360
----------- -----------
$11,664,170 $12,496,873
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
Cityside Apartments, L.P.
STATEMENTS OF OPERATIONS
Year ended December 31,
1995 1994 1993
---------- ---------- -------
<S> <C> <C> <C>
Revenue
Rental $1,285,427 $1,257,143 $1,245,469
Interest and other 29,947 79,278 20,074
--------- --------- ---------
1,315,374 1,336,421 1,265,543
--------- --------- ---------
Expenses
Administrative 163,402 166,358 153,674
Utilities 71,139 76,345 50,125
Operating and maintenance 153,174 160,426 138,219
Taxes and insurance 182,006 175,340 184,328
Interest 662,020 667,127 671,704
Depreciation and
amortization 515,275 515,866 519,330
--------- --------- ---------
1,747,016 1,761,462 1,717,380
--------- --------- ---------
NET LOSS $ (431,642) $ (425,041) $ (451,837)
========= ========= =========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
Cityside Apartments, L.P.
STATEMENTS OF PARTNERS' EQUITY
Years ended December 31, 1995, 1994 and 1993
General Limited
Total partners partner
<S> <C> <C> <C>
Partners' equity,
December 31, 1992 $4,511,238 $ 87,192 $4,424,046
Partner distribution (2,500) - (2,500)
Net profit (loss) - 1993 (451,837) 3,234 (455,071)
--------- ------- ---------
Partners' equity,
December 31, 1993 4,056,901 90,426 3,966,475
Partner distribution (2,500) - (2,500)
Net profit (loss) - 1994 (425,041) 49,211 (474,252)
--------- ------- ---------
Partners' equity,
December 31, 1994 3,629,360 139,637 3,489,723
Net profit (loss) - 1995 (431,642) 7,298 (438,940)
--------- ------- ---------
Partners' equity,
December 31, 1995 $3,197,718 $146,935 $3,050,783
========= ======= =========
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
Cityside Apartments, L.P.
STATEMENTS OF CASH FLOWS
Year ended December 31,
1995 1994 1993
---------- ---------- -------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $(431,642) $(425,041) $(451,837)
Adjustments to reconcile net loss to
net cash provided by operating activities
Depreciation 504,436 504,153 503,325
Amortization 10,839 11,713 16,005
Decrease (increase) in tenant
accounts receivable 182 (7,977) 4,212
Decrease (increase) in
accounts receivable - subsidy 3,279 (11,452) (4,470)
Decrease (increase) in accounts receivable - insurance claims 15,118 (15,118) -
Decrease (increase) in prepaid expenses (3,369) 1,448 (6,429)
Decrease (increase) in
mortgage escrow deposits (8,184) (12,937) 7,754
Decrease in accounts payable (968) (4,213) (6,749)
Increase (decrease) in accrued management fee (1,046) 1,032 1,068
Increase in accrued interest payable 72,563 72,608 72,562
Increase (decrease) in accrued P.I.L.O.T. 3,219 (7,343) 2,089
Increase (decrease) in accounts payable -
fire loss (48,257) 48,257 -
Increase (decrease) in rent deferred credits 300 (28) (911)
Decrease in accounts payable - subsidy - - (636)
-------- -------- --------
Net cash provided by operating activities 116,470 155,102 135,983
-------- -------- --------
Cash flows from investing activities
Increase in reserve for replacements (26,880) (22,791) (20,743)
Increase in rehabilitation escrow (4,233) (2,243) (3,235)
Increase in painting escrow (633) (427) (20,000)
Collection of due from affiliate - - 5,928
Investment in rental property - (5,633) -
Decrease in GNMA deposit - 58,346 -
-------- -------- --------
Net cash provided by (used in) investing activities (31,746) 27,252 (38,050)
-------- -------- --------
Cash flows from financing activities
Principal payments on mortgages (50,999) (46,026) (41,315)
Distribution to limited partner - (2,500) (2,500)
Repayment of due to general
partners and affiliates (376,330) - (50,000)
-------- -------- --------
Net cash used in financing activities (427,329) (48,526) (93,815)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (342,605) 133,828 4,118
Cash, beginning 552,652 418,824 414,706
-------- -------- --------
Cash, end $210,047 $ 552,652 $ 418,824
======= ======== ========
Supplemental disclosure of cash flow information
Cash paid for interest during the year $589,457 $594,519 $599,142
======= ======= =======
See notes to financial statements
</TABLE>
<PAGE>
- - --------------------------------------------------------------------------------
Cityside Apartments, L.P.
- - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 1995, 1994 and 1993
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Cityside Apartments, L.P. was organized under the laws of the State of New
Jersey on April 1, 1988 for the purpose of acquiring, constructing, and
operating a low-income residential housing project under Section 221(d)(4)
of the National Housing Act. The project consists of 126 units located in
Trenton, New Jersey and is currently operating under the name of Cityside
Apartments. Cash distributions are limited by agreement between the
partnership and the City of Trenton to $81,884 annually, however, in no
event can the distributions exceed surplus cash as defined by HUD. The
project qualifies for the low-income credit established by the Tax Reform
Act of 1986.
Rental Property
Land, buildings and improvements are recorded at cost. Depreciation is
provided for in amounts sufficient to relate the cost of depreciable assets
to operations over their estimated service lives using the straight-line
method over a 27.5 year life. Personal property is recorded at cost and is
depreciated over its estimated service life of 5-7 years using accelerated
methods. Improvements are capitalized, while expenditures for maintenance
and repairs are charged to expense as incurred. Upon disposal of depreciable
property, the appropriate property accounts are reduced by the related costs
and accumulated depreciation. The resulting gains and losses are reflected
in the statements of operations.
Each building of the project has qualified and been allocated low-income
housing credits pursuant to Internal Revenue Code Section 42 ("Section 42")
which regulates the use of the project as to occupant eligibility and unit
gross rent, among other requirements. Each building of the project must meet
the provisions of these regulations during each of fifteen consecutive years
in order to remain qualified to receive the credits.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
Cityside Apartments, L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE A ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Amortization
Mortgage costs are amortized over the term of the respective loan using the
effective interest method.
Provision for Doubtful Accounts
The partnership considers accounts receivable to be fully collectible;
accordingly, no allowance for doubtful accounts is required. If amounts
become uncollectible, they will be charged to operations upon such
determination.
Rental Income
Rental income is recognized as rentals become due. Rental payments received
in advance are deferred until earned. All leases between the partnership and
tenants of the property are operating leases.
Income Taxes
No provision or benefit for income taxes has been included in these
financial statements since taxable income or loss passes through to, and is
reportable by, the partners individually.
NOTE B - PARTNERS' CAPITAL CONTRIBUTIONS
The partnership has four general partners which collectively have a 1%
interest - Trenton Investors, Inc., Landex Corporation, The Richman Group,
Inc. and Altman Properties, Ltd. - and one limited partner, American Tax
Credit Properties, L.P., which has a 99% interest. Total general partner
capital contributions received in prior years were $400. The limited partner
was obligated to make capital contributions of $6,098,988, all of which have
been received.
<PAGE>
- - --------------------------------------------------------------------------------
Cityside Apartments, L.P.
- - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE C - LONG-TERM DEBT
Mortgage Payable - Greystone Servicing Corporation, Inc.
The partnership is obligated under the terms of a mortgage payable to
Greystone Servicing Corporation, Inc. (subservicer for the Government
National Mortgage Association). The note is insured by the Federal Housing
Administration (FHA) and is collateralized by a first mortgage on the
property. The note bears interest at the rate of 10.5%.
Principal and interest are payable by the partnership in monthly
installments of $53,371 through August 1, 2019. Principal and accrued
interest due at December 31, 1995 and 1994 are $5,585,811 and $48,876, and
$5,636,810 and $49,322, respectively.
Under agreements with the mortgage lender and FHA, the partnership is
required to make monthly escrow deposits for taxes, insurance and
replacement of project assets, and is subject to restrictions as to
operating policies, rental charges, operating expenditures and distributions
to partners.
The liability of the partnership under the mortgage is limited to the
underlying value of the real estate collateral plus other amounts deposited
with the lender.
Aggregate annual maturities of the mortgage payable over each of the next
five years are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, 1996 $56,619
1997 62,859
1998 69,787
1999 77,478
2000 86,016
</TABLE>
Mortgage Payable - City of Trenton
The partnership is obligated under the terms of a mortgage from the City of
Trenton, State of New Jersey. The note bears interest at the rate of 3.125%.
Annual payments of principal and interest, limited to surplus cash as
defined and in accordance with the terms of the agreement, were scheduled to
commence on February 4, 1993. No payments were due in 1994 and 1995 under
the terms of the agreement. All unpaid principal and interest is due and
payable on February 4, 2006, subject to extension to August 1, 2019 at the
discretion of the first mortgagee. Principal and accrued interest due at
December 31, 1995 and 1994 are $2,336,300 and $358,956, and $2,336,300 and
$285,947, respectively.
<PAGE>
- - --------------------------------------------------------------------------------
Cityside Apartments, L.P.
- - --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE C - LONG-TERM DEBT (Continued)
Mortgage Payable - City of Trenton (Continued)
The loan is secured by a second mortgage on the real estate. The liability
of the partnership under the mortgage is limited to the underlying value of
the real estate collateral.
Management believes it is not practicable to estimate the fair value of the
mortgages because programs with similar characteristics are not currently
available to the partnership.
NOTE D - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Due to General Partners and Affiliates
As of December 31, 1995 and 1994, the partnership owes the general partners
and certain affiliates $43,326 and $419,657, respectively, for development
fees, construction management fees, and other construction items.
The advances are noninterest-bearing and due on demand.
Partnership Administration Fee
The partnership has entered into a Partnership Administrative Services
agreement with the general partners for their services in managing the
business of the partnership. The annual fee is equal to 50% of net cash flow
available for distribution as defined in the partnership agreement with a
maximum of $250,000 per year. No such fee was incurred during 1995, 1994 and
1993. The cumulative amount payable as of December 31, 1995 and 1994 is
$35,851.
Management Fee
The property is managed by an affiliate of the general partners. The
management fee is 6% of project receipts and the management agent also
receives fees for accounting services provided to the partnership.
Management fees charged to operations during 1995, 1994 and 1993 were
$77,346, $74,352, and $74,873, respectively. Accounting fees charged to
operations were $6,804 during each of the three years ended December 31. At
December 31, 1995 and 1994, $6,690 and $7,736, respectively, in management
and accounting fees are payable.
<PAGE>
Cityside Apartments, L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE D - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
(Continued)
Insurance
The sole shareholder of an affiliate of one of the general partners provided
debt service financing for the capitalization of LaMere Associates, Inc.
(LaMere). In connection with such debt financing, the shareholder received
20% of the stock of LaMere. LaMere was paid premiums in connection with the
following insurance coverage provided to the project: property, auto,
workmen's compensation, liability and umbrella. In connection with such
insurance coverage, the project incurred $57,574, $50,495, and $49,702 in
premiums for the years 1995, 1994 and 1993, respectively.
Repair of Fire Damage
The partnership's property sustained fire damage during 1994 to two of its
buildings. Total repair costs incurred were $63,257, of which $55,013 were
been reimbursed by the partnership's insurance company. The repairs were
performed by an affiliate of one of the general partners. The partnership
also incurred $18,140 of rental income loss, all of which was covered by
insurance. As of December 31, 1995 and 1994, $-0- and $48,257, respectively,
of the costs incurred for repairs remain payable and $-0- and $15,118,
respectively, of insurance reimbursements remain receivable.
Shared Project Payroll Costs and Expenses
As approved by the State of New Jersey Department of Community Affairs,
Division of Housing and Community Resources, payroll and all other direct
costs of employment for certain employees are shared between the partnership
and Cityside Apartments, Phase II, L.P., a contiguous project. The projects
share a common management office and therefore share office expenses.
Certain non project specific maintenance expenses are shared between the
projects. These payroll costs and expenses are allocated based on the number
of units in each project. Also approved, the social service director/site
manager provided services to another project the management agent manages.
The partnership was reimbursed by the management agent for the services
provided based on the time spent on the other project.
<PAGE>
Cityside Apartments, L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE D - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
(Continued)
Computer Services
In accordance with HUD Handbook 4381.5 Rev-2, Paragraph 6.38, the
partnership uses the services of a computer consultant company to provide
the following services: purchase and install personal computers and the
related equipment and software for the project's rental office, provide
training and technical support, and consult on software upgrades. Dynamic
Information Services, Inc. (DIS), which is owned by a relative of an officer
of the management company, is a licensed representative of Project Data
Systems, Inc., a nationally known provider of computer system software for
the subsidized housing industry. DIS derives 40% of its consulting service
revenues from third party clients not affiliated with the management
company. In 1995, the partnership paid DIS $183 for technical support and
training services based on billable hours.
NOTE E - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS
All profits and losses are allocated 1% to the general partners and 99% to
the limited partner.
Distributable cash flow, as defined by the partnership agreement, is
distributable 1% to the general partners and 99% to the limited partner.
However, cash distributions are limited as described in note A.
Gain, if any, from a sale, exchange or other disposition is allocable as
follows:
1. To all partners having negative balances in their capital accounts
prior to the distribution of any sale or refinancing proceeds, an
amount of such gain to increase their negative balance to zero.
2. 1% to the general partners and 99% to the limited partner until
until the limited partner has received anamount equal to its gross
capital contribution.
3. The remainder of such gain, if any, 50% to the limited partner and
50% to the general partners.
<PAGE>
Cityside Apartments, L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE E - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS
(Continued)
Loss from a sale is allocable as follows:
1. To the partners such that after such allocation their respective capital
accounts will be proportionate to their interests.
2. To the partners until each partner's capital account equals their
capital contribution.
3. To the partners to the extent of and in proportion to each partner's
capital account.
4. Any remaining loss is allocated to the partners in accordance with the
manner in which they bear the economic risk of loss.
NOTE F - HOUSING ASSISTANCE PAYMENT CONTRACT AGREEMENT
The Federal Housing Administration (FHA) has contracted with the partnership
under Section 8 of Title II of the Housing and Community Development Act of
1974 to make housing assistance payments to the partnership on behalf of
qualified tenants. The agreements are on a unit-by-unit basis, have a
15-year term and expire on various dates through May 2005.
NOTE G - CONCENTRATION OF CREDIT RISK
The partnership maintains its cash balances in seven banks. The balances are
insured by the Federal Deposit Insurance Corporation up to $100,000 by each
bank. As of December 31, 1995, the uninsured portion of the cash balances
held at one of the banks is $69,965.
NOTE H - CONTRACT WITH THE CITY OF TRENTON (IN LIEU OF TAXES)
The partnership has entered into an agreement with the City of Trenton
whereby the partnership pays a service charge in an amount equal to 6.28% of
gross rents as defined in the agreement. During 1995, 1994 and 1993,
$82,167, $80,873, and $79,623, respectively, was charged to operations and
$29,157 and $25,938, respectively, is owed at December 31, 1995 and 1994.
<PAGE>
Cityside Apartments, L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1995, 1994 and 1993
NOTE J - CONTINGENCY
The partnership's low-income housing credits are contingent on its ability
to maintain compliance with applicable sections of Section 42. Failure to
maintain compliance with occupant eligibility, and/or unit gross rent, or to
correct non-compliance within a specified time period could result in
recapture of previously taken tax credits plus interest. In addition, such
potential noncompliance may require an adjustment to the contributed capital
by the limited partner.
